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March 4, 2014

Florida restaurants add 'ACA surcharge' to customer bills

Daily Briefing

    A chain of eight Florida restaurants has added a 1% "Affordable Care Act" (ACA) surcharge to diners' bills in an effort to cover compliance costs associated with the law's employer mandate, even though employees will not be covered until December, Tami Luhby reports in CNN Money.

    The employer mandate—which is a component of the ACA's broader coverage expansion—requires businesses with more than 50 employees working 30 hours or more per week to provide affordable health insurance coverage to workers or face fines.

    Last month, the Obama administration announced a second delay for the employer mandate. Now, mid-sized employers have until 2016 to provide affordable coverage for all workers, while large employers must offer affordable coverage to 70% of workers by 2015 and 95% of workers in 2016.

    Understand the updated timeline for the employer mandate

    Florida restaurant explains fee

    The owners of eight Gator's Dockside restaurants have alerted customers to the new charge—which is included as a line item on customers' receipts—by posting their reasons behind the fee on signs throughout the restaurants.  

    The signs read: "The costs associated with ACA compliance could ultimately close our doors. Instead of raising prices on our products to generate the additional revenue needed to cover the costs of ACA compliance, certain Gator's Dockside locations have implemented a 1% surcharge."

    (Other Gator's Dockside locations have opted not to implement the surcharge.)

    For now, only managers receive health benefits, but about half of the chain's 500 employees are full-time workers and will begin receiving health benefits in 2015. According to Sandra Clark, Dockside's director of operations, the company added the surcharge now to meet the estimated $500,000 in annual compliance costs and to continue to offer full-time hours to its employees.

    RAND: Delaying the employer mandate will hardly affect the ACA

    "I'm just trying to keep the employees I have that I've worked hard to train," Clark says, adding that she estimates the surcharge will bring in about $160,000 a year. In addition, the restaurant chain has hired an additional employee and a consulting firm to track workers' hours and ensure that the company is complying with the law.


    While Gator's Dockside says the move is not political, the chain is receiving national attention from pundits and politicians. "There are costs associated with all kinds of government regulations and spending, but [the restaurateur is] not creating a line item on his tab to highlight his share of, say, financing the Department of Defense," Jonathan Chait writes in New York magazine.

    Some businesses point out that other restaurateurs that previously attempted to implement an ACA-related surcharge have suffered a customer backlash (Luhby, CNN Money, 2/27; Leung/Luna, O.C. Register, 2/27;  Chait, New York Magazine, 2/27).

    More from today's Daily Briefing
    1. Current ArticleFlorida restaurants add 'ACA surcharge' to customer bills

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