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WASHINGTON – Customers are finding additional charges on their restaurant bills, and the reason for the added tab may be Obamacare’s Affordable Care Act mandate. But companies that are charging fees to patrons for healthcare penalties that will kick in next year should be cautious. They may be committing surcharge fraud.
CNNMoney reported recently that several restaurants in Florida are asking customers to help foot the bill now for the employer mandate, which begins in 2015. One of those food chains said it needs to implement the surcharge now because of the compliance costs they will be facing after December 2014.
That firm, Gator’s Dockside, employs 500 people, half of which are working fulltime. While only management receives health benefits today, the company will have to cover all fulltime workers when the mandate kicks in. By adding the surcharge, the company will be able to continue offering fulltime hours to many employees.
Gator’s has also hired one additional staffer and a consulting firm to make sure it is complying with the law, more added expenses for the healthcare program. The firm estimates it will cost $500,000 a year to extend insurance to its fulltime hourly workers. It hopes the added surcharges will bring in about $160,000 a year.
Not all Dockside restaurants are onboard with implementing the fee, the CNN report said. Thirteen others, run by different firms and franchisees have chosen not to collect for Obamacare. Other restaurant brands are choosing a different route in collecting for new healthcare expenses. They are adjusting prices across the board on menu items.
Another restaurant in Los Angeles is charging its customers three percent surcharge that allows it to employ all of its 80 fulltime workers while providing them with health insurance. They explain to customers in a sign why they are charging the fee. “The surcharge is not related to Obamacare, a restaurant spokeswoman said. The eatery is not subject to the employer mandate until 2016 because it has fewer than 100 workers, but it already offers coverage to its staff,” CNN reported.
But Gator’s Dockside director of operations is afraid for the solvency of his company if he can not collect the surcharge today for Obamacare. He has posted signs in their restaurants stating, “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 percent surcharge on all food and beverage purchases only.”
Warnings of surcharge fraud
FindLaw, an online legal report, reminds readers that a surcharge on bills is not a new phenomenon. It says companies have been collecting surcharges for years for various reasons. But the reporter cautions that a surcharge is also an added liability imposed on something that is already due, such as a tax on tax. “A valid surcharge requires full disclosure of the fee that will be charged,” the article states.
The author further explains that companies need to be aware of something called “surcharge fraud.” If firms are found collecting surcharges versus how much was actually set aside for employee health care, they could be accused of a form of fraud. Although a company’s intentions are not intentional, they should seek advice as to whether they can use surcharge money for other expenses.
CNNMoney reported last month that companies that don’t provide insurance will be fined $2,000 per employee, adding, “But they will be subject to a $3,000 penalty if they don’t offer affordable coverage and one of their workers buys a subsidized plan on the individual exchange.”