Countdown to ACA Compliance – Part III
The PACE Staffing Network has been preparing for the employer mandates of the ACA for well over two years. As members of the American Staffing Association (ASA), we provided input into several areas of proposed regulation, and attended countless hours of ACA related training. With the ACA’s employer mandates ready to launch January 1 2015, we wanted to share information on the specifics of how the ACA impacts your use of temporary/contract employees. For ideas on how to better manage your needs for staff in light of new ACA mandates, contact a member of our Partnership Development team by contacting firstname.lastname@example.org or calling 425-637-3312.
In what ways has the ACA already impacted your temporary and contract workers?
What changes go into play in 2015?
Are most staffing agencies already offering insurance?
What requirements must be met in order for a temporary or contract employee to become eligible for ACA benefits on January 1st, 2015?
What must a staffing company contribute to the employee’s insurance costs in order to ensure “affordability?”
How will newly assigned temporary and contract employees become eligible for coverage in 2015?
- Full-time – working 30 or more hours per week and projected to work at least 1560 hours in the coming 12 months,
- Part-time – working less than 30 hours a week, or
- Variable hour – employees whose status as either full- or part-time can’t be determined at point of hire.
- Seasonal – employees working 6 months or less at specific times throughout a calendar year.
How will most staffing companies decide to become compliant—will they pay or play?
- A plan that meets both the “minimum value” (MVP) and the “minimum essential coverage” (MEC) definitions—with a 60% actuarial value covering core services. This plan will meet all the requirements of the employer mandate.
- A plan that meets only the “minimum essential coverage” (MEC) definition – A less costly plan that meets only individual mandate requirements.
Do you need to know if and how a company providing temporary or contract staff to your organization is ACA compliant?
What will be the” added costs” for staffing agencies to become compliant with the ACA in 2015?
- The increased costs of ACA related administration which will be considerable—starting with changes in point of hire administration, monthly reporting, annual reporting to both employee and the IRS, etc.
- The increase in direct costs associated with either offering the required insurance coverage or paying the penalties associated with not offering.
- How many "full-time" employees they have in their workforce relative to their total workforce?
- What percent of their eligible full-time employees will take the insurance once offered?
- The eligible employees rate of pay to arrive at the costs the agencies will incur to make their plan "affordable."
- The costs of the insurance products they are offering.
For staffing companies who elect to “pay,” are they subject to taxes/penalties on all their temporary employees?
What ACA related costs are still unknown/unclear?
How will the individual staffing company deal with their cost increases?
How will the price increase be handled?
How will the increased costs of temporary and contract workers compare with the increased costs associated with the ACA for other types of employees?
What other cost increases will employers experience in 2015?
When it comes to managing staffing providers, are there other elements of the ACA that employers should be paying attention to?
Do we need to be concerned about “abuse” clauses?
Is there future ACA stuff that we should be thinking about for 2016 and beyond?
- Discrimination Issues. Current thinking is that all the ACA specific regulations related to discrimination will come out in 2015 and be implemented in 2016. The ACA is clear that any plan or employer contribution that provides a differential benefit in favor of highly compensated employees will be specifically disallowed. This means that once discrimination regulations have been written and put into play, employers will no longer be able to provide special plans or higher levels of contribution to their higher paid employees—short of making them available via post-tax dollars.
- Special tax on Cadillac Plans. In 2018, employers will be taxed on Cadillac benefit that cost more than $10,200 ($850)/month per individual. The tax on Cadillac plans is 40%—making these plans prohibitive for most employers. Employers with Cadillac plans will likely look for alternative approaches.