Health Care Reform and Staffing Agencies – A Strategic Perspective

With the election over and 2012 coming to an end, employers are one step closer to January 1, 2014 – the date when most of the remaining provisions of the Patient Protection and Affordable Care Act (ACA) go into effect. Staffing agencies are carefully evaluating the Shared Responsibility provision, given the fundamental changes it necessitates regarding benefits for temporary employees. In short, Shared Responsibility requires that employers with 50 or more full-time employees offer health insurance that meets “minimum value” standards, including:60% “actuarial value” for participants, “minimum essential coverage” in certain categories of care, and “affordability.”

Employers not meeting the Shared Responsibility requirements are subject to an excise-tax penalty. A common misconception throughout the industry is that not providing coverage and paying the penalty is a viable option and less expensive than actually providing coverage. Unfortunately, there’s more to the story.

It’s the Law
The law requires self-reporting of an employer’s health plans to both the Internal Revenue Service and the Department of Labor – every year, in writing. Failing to offer coverage may be noted quickly and repeatedly, as every time an employee goes to a federal exchange for subsidized health insurance coverage, the exchange will review those reports to determine what benefits the employer offers and how much they charge for it in order to establish the employee’s eligibility for the subsidy.

Secondly, due to a very favorable safe harbor established by the IRS with Notice 2012-58, staffing agencies will have up to a full year to evaluate an employee’s hours to determine whether they are a “full-time” employee. The ACA defines a full-time employee as one who averages 30 or more hours per week. The nature of the staffing industry is such that typically, only a very small percentage of employees will meet that definition over the course of twelve months and remain a temporary employee with the same agency.

Staying Safe
Finally, accurate financial analysis is critical to making the correct decision regarding the Shared Responsibility requirement. More and more businesses are realizing that abiding by the regulations not only keeps them in compliance, it’s also their most cost-effective choice.

Jeff Friedrich
Jeff Friedrich is a principal at Assurance, a staffing industry insurance brokerage firm. He can be reached at: jfriedrich (at) assuranceagency (dot) com.

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Staffing Agencies
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