Denver Staffing Agency - Affordable Care Act "Higher Fee" Rule
Affordable Care Act (ACA)
Treas. Reg. §54.4980H-4(d)(2)
The “Higher Fee" Rule
The ACA Special “Higher Fee” Rule – Offer of Coverage on Behalf of the Client
Some staffing firm clients are asking staffing firms to charge a “higher fee” for its temporary or contract employees enrolled in the staffing firm’s health insurance plan than for those who are not enrolled under a special rule found in Treas. Reg. §54.4980H-4(d)(2). Why?
“Higher Fee” Rule Satisfies Client’s ACA Obligation as a Common Law Employer
If a “higher fee” is charged as required by the rules, the coverage offered by the staffing firm will be viewed as provided by the client, thus satisfying the client’s ACA obligation as a common law employer. The purpose of the “higher fee” is to show that the client, in fact has paid something for the cost of the employees who enroll in the staffing firm’s health insurance plan. The “higher fee surcharge” is in addition to and separate from the hourly bill rate to the client for the professional staffing services provided.
HIPAA Privacy Rules
Client Requests for Employee Enrollment Data Could Raise Privacy Issues
In a recent March 25, 2015 article, “Client Requests for Employee Enrollment Data Could Raise Privacy Issues”, Edward A. Lenz, Esq., Senior Counsel, American Staffing Association discusses the role and application of the HIPAA Privacy Rules as it relates to employee enrollment data requests, specifically requesting the identity of the enrolled employees by name.
Under the special rule found in Treas. Reg. §54.4980H-4(d)(2), nowhere does the special rule require the staffing firm to identify the enrolled employees by name. The American Staffing Association’s team of legal experts believe that disclosing employee names is not only unnecessary, it also could run afoul of the rules governing medical privacy under the Health Insurance Portability and Accountability Act of 1996 (HIPPA).
HIPAA Privacy Rules
Bars Employer-Sponsored Group Health Plans From Disclosing Protected Health Information (PHI)
The HIPAA Privacy Rule bars "covered entities"--which includes employer-sponsored group health insurance plans-from using or disclosing an individual's protected health information (PHI), other than for certain limited purposes (generally relating to treatment, payment or health care operations), to anyone--unless an exception applies or the individual authorizes the disclosure. Although HIPAA treats the employer as separate and distinct from the group health insurance plan, a group health insurance plan cannot disclose PHI even to a sponsoring employer without an exception or employee authorization. Moreover, where disclosure is permitted, HIPAA requires that the information disclosed must be limited to the minimum amount necessary to accomplish the intended purpose of the disclosure.
In sum, because there is a downside to disclosing the identity of the enrolled employee by name, prudence would suggest staffing firms not disclose the information unless employees expressly consent to such disclosure in writing.
The information above does not constitute legal advice.
Employers and corporate entities should consult a Colorado labor or employment attorney with additional questions, or for guidance and more information.
Source: American Staffing Association (ASA), Edward A. Lenz, Esq. | Senior Counsel
Client Requests for Employee Enrollment Data Could Raise Privacy Issues, March 25, 2015