How the ACA can benefit hotels employing seasonal workers

Summer is around the corner, and hotels are preparing to welcome waves of seasonal travelers. But before they can do so, many must be prepared to take on seasonal workers. While the Trump administration has been hard at work attempting to repeal and replace the Affordable Care Act, the health-care bill remains the law of the land and within it are a few choice provisions small hoteliers can take advantage of with regard to seasonal workers.

According to Arthur Tacchino, health care reform expert and chief innovation officer at health care reporting and compliance company SyncStream Solutions, operators have much to gain from avoiding “Applicable Large Employer” status under the ACA, which, if achieved, can relieve a business from a multitude of compliance regulations and taxes, including exemption from requirements for minimum required health-care enrollment coverage and no annual reporting.

What does it take to qualify as an ALE? The concept is simple. If a hospitality employer has fewer than 50 full-time employees, including full-time-equivalent employees, on average during the previous year, that company is not an ALE for the current calendar year. The reverse is true for companies with at least 50 full-time employees as of the previous calendar year; they will be subjected to employer shared-responsibility provisions and employer information-reporting provisions.

The key, according to Tacchino, is that companies that don’t qualify as an ALE also don’t have to provide health-care benefits to seasonal employees, whereas ALE-qualified operators do.

“Any company that meets those requirements can take advantage of all these benefits,” Tacchino said. “If I can, that’s great; I can avoid regulations. If I can’t, then I have to treat seasonal workers just like full-time workers.”

When asked how aware operators are of this provision, Tacchino said knowledge of ALEs is spotty at best. 

“This is one of those nuances in the ACA that is just not broadcasted; it’s just a very small part of the regulations,” he said. “There are maybe 10 sentences in the ACA that deal with ALEs, but those are a key 10 sentences that deal with compliance issues. Hotels with access to an educated broker are, in some cases, taking advantage of the law, but from our experience [hotels] don’t know about it or haven’t heard of it.”

Hotels with a large number of seasonal employees relative to full-time employees stand to benefit from avoiding ALE qualification.

Walk the Line

The finer points of this law come into question for hotels that are riding the line close to 50 full-time workers. Tacchino said that a hotel company operating with 180 full-time workers, 100 part-time workers and 50 seasonal staff members should forget about ALE issues because they clearly qualify. But to hotels on the cusp of having 50 full-time employees, with part of their staff is made of up seasonal workers, this special rule can be of great importance.

“As an employer, I don’t want to be subject to being an ALE when I don’t have to be,” Tacchino said. “Does this rule help your hotel? Possibly, but they’ll have to do the math.”

Another confusing aspect for hotels is how the law defines “ownership.” Tacchino said rules for aggregation and control groups apply, so an owner with two Marriott properties, one in Pennsylvania and another in Delaware, is going to have to combine those properties to determine how many staff members they employ.

“What’s more, a group of people owning a certain percentage of 10 or 20 different properties will have a harder time determining if they are an ALE, as they will have to aggregate all of their stakes and do the math,” Tacchino said.

When asked if the uncertain future of the ACA is expected to have an impact on ALE status, Tacchino said he expects the law to change, but not completely. Because of this, he said hotels shouldn’t wait to determine if they are ALEs or not because those tax breaks and benefits will still be around for owners in one form or another.

“Even Democrats in support of the ACA want broad changes to the law,” Tacchino said. “Whether it’s the ACA or another law, in every proposal ever put forth before Congress, they add in an employer reporting requirement, even Republicans. 

“Employers may not be giving the IRS a 1095 form, but it will be a new form asking the same questions,” Tacchino said. “One way or another, employers will be involved in providing that information for the government. There will always be a tax credit included in every health-care plan put forth, and in order for the government to administer those credits accurately, they need employee information, otherwise it would be a free-for-all.”