Staying ahead of the ACA

The good news for staffing firms is that the requirement for providing health care coverage to employees has been delayed until Jan. 1, 2015. This applies to all large employers, or those with more than 100 full-time or full-time-equivalent employees in 2014. Those with between 50 and 99 employees have until Jan. 1, 2016 to provide health care coverage.

Most staffing firms fall under the former category. And although the requirement has been delayed until 2015, now is the time to start preparing and planning.

Understanding the requirements

While staffing firms traditionally have not provided health care coverage to temporary employees due to the high costs associated with turnover, firms must now offer “minimum essential coverage” to at least 70 percent of full-time employees in 2015 and 95 percent in 2016, and to their dependent children under age 26. If they fail to do so, they will be assessed a penalty of $2,000 per full-time employee, although the first 30 full-time employees are exempt.

If at least one full-time employee receives a premium tax credit because the employer’s policy is either unaffordable (costing more than 9.5 percent of the employee’s yearly household income) or does not cover 60 percent of total costs, the employer must pay the lesser of $3,000 for each employee receiving a credit or $750 for each full-time employee total.

Under the act, full-time employees are those who work an average of 30 or more hours per week, although staffing firms may be able to classify employees as variable-hour or seasonal, allowing them to evaluate the employee’s hours during a look-back period of the initial 12 months of employment before offering health care coverage if the person averages at least 30 hours per week.

 Determining costs

While costs will vary among staffing firms depending on the coverage they choose and the number of employees, the American Staffing Association has created a checklist to help firms estimate their costs.

  •  How many employees will qualify as full time?
  • Assuming health insurance plans are available for temporary employees, how many employees will participate in the plan?
  • What will the firm need to contribute to make the health insurance plan affordable to the employee?
  • How many employees will be enrolled in Medicaid, which may reduce firm costs?
  • How many employees may be eligible for ACA subsidies?

And while firms may think it is a good idea to try to reduce costs by supplying only part-time employees, terminating an employees or reassigning them to avoid reaching full-time status, doing so can be viewed an abuse of an employee’s hours and result in an Employee Retirement Income Security Act investigation and penalties.

To get a better idea of costs, ASA members can also access a cost calculator at aca.americanstaffing.net.

Following developments

The ACA and its impact on staffing firms continue to change and evolve. Stay up to date on the latest news by frequently visiting healthcare.gov and americanstaffing.net. In addition, speak to your lawyer, accountant, financial adviser, human resources manager and other affected parties to ensure current and continued compliance.