The U.S. Bureau of Labor Statistics recently named the hospitality industry as the fastest-growing sector in the U.S. It already employs 14 million people and is expected to account for 23.1% of all new jobs from 2021 to 2031. This dramatic increase will have a huge impact on the way companies offer employee benefits. That’s because hospitality is one of the industries most at risk for Affordable Care Act (ACA) compliance penalties, which can cost companies millions of dollars a year.  

A key piece of the ACA was the rule that large employers had to offer employees health coverage. While that sounds straightforward, the specifics get complicated, fast. It only applies to companies with an average of at least 50 full-time or full-time-equivalent employees (something that’s determined by the average size of your company the preceding calendar year), you need to offer the benefit to at least 95% of your employees and their dependents, and the plan has to be both affordable and provide “minimum value,” meaning it covers at least 60% of the total cost of medical services for a standard population.  

Those details matter because if you do not follow them, the IRS will make you pay—and enforcement is ramping up this year. There are two types of penalties, an (a) Penalty, which is due to not offering enough employees coverage, and a (b) Penalty, which is if your plan is not affordable or does not provide minimum value. While any company in any industry could be penalized, here are four with an especially high risk: 

Leisure and Hospitality

This category includes people who work in restaurants and bars as well as event planners, those who work in performance arts, and more. 

Home Healthcare

This industry is made up of nurses, companions, physical therapists, and other professionals who perform medical and non-medical tasks at patients’ homes. It’s quickly expanding thanks to an aging population, with an expected 25% growth from 2021 to 2031. 

Staffing

Made up of temporary and contract employees across a wide range of other industries, staffing employs around 16 million people in a given year. 

Construction

Around  11 million people work in this industry, with three out of four working as an employee at a company.  

What makes these industries so high-risk? 

While it can seem like these industries have little to do with each other, they do share some similarities that make them especially high-risk when it comes to ACA penalties. These include: 

Lack of a centralized HR team

Your company needs to send reports to both employees and the IRS, as well as track a lot of data to stay compliant. This means always knowing stats like how many full-time and part-time employees you have, how many have been offered health care benefits, and how many have accepted the benefits offered. And this is a job that usually falls on HR to perform. If there isn’t a clear central human resources department, something that can be more common in the above industries, there might not be anyone making sure these tasks get done correctly. 

More hourly workers than salaried ones

When most of your workforce is paid by the hour with schedules that vary from week to week, it can be tough to know who is considered a full-time employee and, therefore, who should be offered health insurance. As a general rule of thumb, the IRS counts an employee as full-time if they work an average of 30 hours a week or 130 hours a month. Adding to the confusion, part-time workers can impact how many “full-time employees” your company has and whether you hit the 50 full-time employee threshold. The IRS will take all the hours worked by your part-time workers and divide it by 120 to get your “full-time equivalent employee count.” That gets added to your actual number of full-time employees when determining your company size. 

High turnover

When your employees are regularly being replaced, and new hires are constantly being onboarded, your HR team can have a harder time tracking the data. This can cause confusion over who is eligible for health benefits, who needs to transition to COBRA, and more.  

A tendency to have employees decline health coverage benefits

As long as you meet the ACA criteria of who you offer insurance to and what the plans cover/cost, you shouldn’t be hit with a penalty. But if you do not offer a plan that is considered affordable (meaning you are not making employees contribute more than 9.12% of their household income for self-only health insurance in 2023) and just one employee gets insurance on a government marketplace and qualifies for a subsidy, you could be penalized.  

Avoiding penalties in the future 

If there is one thing to take away from the above, it can be easy to not realize you are in danger of being penalized. A solution that can help is an Individual Coverage Health Reimbursement Arrangement or ICHRA. No matter how many employees you have, an ICHRA can allow you to give your team a monthly allowance to put towards health care services. Even better: Going this route will ensure you are ACA-compliant and will not have to pay a costly fine. For help offering your employees this option, download SureCo’s ICHRA guide.