With the Patient Protection and Affordable Care Act in effect, most convenience stores are ready to follow suit.
By Anne Baye Ericksen, Contributing Editor
After years of political posturing, court battles and postponements, the Shared Responsibility Employer Mandate aspect of the Patient Protection and Affordable Care Act (ACA) is now in full effect.
For individuals, the mandate boils down to an additional figure entered into their W-2 forms—the total value of coverage during the calendar year. For employers, the mandate entails a multi-step process that culminates in the Internal Revenue Service (IRS) filing that came into play at the beginning of this year.
“The reporting requirements fall under the IRS, but it’s all about the [health insurance] coverage offered and which employees take the coverage,” said Christine Pollack, vice president of government affairs for the Retail Industry Leaders Association (RILA).
In fact, the Shared Responsibility Employer Mandate can determine how, or even if, a convenience store business needs to file.
Companies with 50 or more full-time employees throughout a calendar year are considered to be an applicable large employer (ALE), and must fulfill the employer mandate. For ALE entities, the distinction between full and part time becomes a critical factor. Under ACA regulations, a full-time employee is defined as anyone who clocks in at least 30 hours per week on average.
Bobby & Steve’s Auto World, headquartered in Eden Prairie, Minn., consists of eight c-stores and car washes, as well as auto repair and tow truck businesses, all of which rely on Bobby & Steve’s Auto World Holdings LLC to handle corporate duties, such as administering benefits, including health insurance.
“We have a couple of locations that have blended together into a control group, and that could be considered an applicable large employer. Then we have a couple of them that waiver up and down between the 50 full-time employees. It will be interesting to see, once all the hours are in at the end of the year, what it will look like for five or six stores,” explained Melissa Schlinger, director of human resources.
Not surprisingly, the 30-hour distinction has compelled some c-stores to reformulate staff classifications.
Due to its size, Casey’s General Store Inc. has been through the ACA reporting procedure once before. Companies with 100 or more full-time employees were required to file proof of healthcare coverage for the 2014 tax year. The government delayed the employer mandate for businesses with 50-99 employees until this year.
“Casey’s considers an employee full time when they work 35 or more hours per week. Thus the definition provided by the regulations for full-time healthcare eligibility created much more internal work and consideration,” said Bill Walljasper, senior vice president and chief financial officer. The Ankeny, Iowa-based c-store chain operates more than 1,900 sites in 14 states and more than half of its 33,873 employees qualify as part-time.
“We have such a large part-time workforce that tracking eligibility…was much more challenging than the other reporting requirements,” Walljasper said.
More specifically, for the 2015 tax year, larger employers are required to offer coverage to 95% of full-time staff, and companies in the smaller category must meet a 70% threshold, which is set to increase to 95% this year.
“We have been tracking work hours for over a year to see how we could be affected by the ‘look back’ (offering coverage to those regularly working 30 hours or more) once we’re outside the safe-harbor period,” said Walljasper.
Safe harbors help companies determine if their employer-sponsored health insurance plans qualify for the ACA’s affordability standard. According to the IRS, health insurance costs must be less than 9.5% of the individual’s annual household income.
According to the IRS Website, “an employer may choose to use one or more of the safe harbors for all of its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category. If an employer offers multiple healthcare coverage options, the affordability test applies to the lowest-cost self-only option available to the employee that also meets the minimum value requirement.”
Companies must complete IRS Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage. Form 1095-B contains the requisite information, including the filer’s identifying data, names of insurance issuers and a listing of individuals covered.
Any business submitting 250 or more returns is required to file electronically.
Additionally, the law compels companies to supply employees with a hard copy of this information, which began Feb. 1, 2016. Workers can grant employers permission to receive the forms electronically.
“That might sound simplistic, but it’s not. It can be tedious and burdensome,” said RILA’s Pollack. “Hopefully, everyone has been keeping monthly records of who accepts the basic employer-sponsored coverage. I would tell employers to go to the IRS Website first so they can become familiar with the law. The data points are laid out there.”
Industry analysts and c-store owners and executives point to the administrative aspects as perhaps the most problematic in meeting ACA reporting requirements. At Bobby & Steve’s Auto World, Schlinger chose a payroll firm to help her navigate the process.
“When I first came on board two years ago, the payroll and HR systems weren’t talking to each other. What I knew about the ACA at that point was that these systems had to talk,” Schlinger said. “I researched new payroll and HR systems to house the information and I chose ADP. ADP also has an ACA package that links time and attendance into the module. It pulled together the information to extract the reporting data.”
Noncompliance can result in penalties of $100 for each return failure, not to exceed $1.5 million per year. Fines are also applied for failure to disseminate individual payee statements.
Despite enlisting a vendor with subject matter expertise, Schlinger still anticipates a steep learning curve as she experiences the process for the first time.
“I know they will be coming back to me at some point with questions,” she concluded. “That hurdle is yet to be seen, but I’m happy right now knowing we’re this far into the game.”