Denver Staffing Agency - Working With a Staffing Company Under the Affordable Care Act

  • Posted by: J. Kent Gervasini |
  • 12/2/14 |
  • 8:09 PM
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Denver Staffing Agency - Working With a Staffing Company Under the Affordable Care Act


Affordable Care Act - Who is a Variable Employee Under the ACA?

Affordable Care Act
Who is a Variable Employee Under the ACA?

       

What Staffing Clients Need to Know
About Compliance


ACA Employer Mandate - Effective Jan. 01, 2015



The Staffing Industry’s Position on the ACA

  • Members of the American Staffing Association, the industry’s leading organization of staffing companies, are informed about the ACA and committed to compliance
  • J. Kent Staffing will not participate in business practices that violate the intent of the law
  • The U.S. Internal Revenue Service will scrutinize arrangements primarily aimed at avoiding ACA requirements

Impact of the ACA on Staffing Firm Clients

  • Client companies should not have ACA liability for staffing firm employees since the staffing firm is generally the employer
  • If, in a particular case, the staffing firm is not the employer, it can still satisfy the client’s ACA obligations by offering benefits on behalf of the client
  • The ACA will result in higher staffing costs


Important Definitions Under the ACA
 

Full-Time Employee
  • An individual who averages at least 30 hours of service per week (130 hours per month)
Minimal Essential Coverage (MEC)
  • An employer group health plan that covers "medical care" (amounts paid for the "diagnosis, cure, mitigation, treatment, or prevention of disease...")
Minimum Value (MV)
  • A plan's share of the cost of benefits is at least 60% and covers, at minimum, physician and mid-level practitioner, hospital and emergency, pharmacy, laboratory, and imaging services
Affordable
  • An employee's share of the cost for a single-only plan is no more than 9.5% of the employee's income
Variable-Hour Employee
  • An employee whose full-time status cannot be reasonabily determined at the start of employment or over a look-back period because the individual's employment is variable and uncertain.
  • For example, a staffing firm can reasonably expect that an employee will be considered variable-hour because he or shee will be offered short-term assignments (generally less than 13 weeks) with different clients with gaps in between assignments
Nonvariable-Hour Employee
  • An Employee is considered nonvariable-hour when the staffing firm can reasonably determine at thte start of employment that the employee will work full-time on an ongoing basis
  • Note that assignments exceeding 13 weeks may be considered full-time unless variable-hour factors are present
  • Staffing firms must offer coverage to full-time employees within 90 days of employment or pay penalties

 

Key Provisions of the ACA - The Employer Mandate Takes Effect Jan. 1, 2015

  • Employers with 100 or more full-time employees (or full-time equivalents) must offer MEC to their full-time employees (and their dependent children)
  • Those that do not are subject to penalties
  • Individuals must maintain MEC for themselves and their dependents or pay penalties
  • Individuals with household income at 100% to 400% of the federal poverty level may be eligible for government subsidies to buy insurance through a public exchange

The “Play or Pay” Options

  • An employer opts to “play" when it offers MEC to 70% of its full-time employees and their dependent children under the age of 26 (excluding spouses)
  • An employer opts to “pay” penalties when it decides not to offer such coverage

Potential Penalties Under the “Play” Option

  • No tax to “play” unless the plan is “unaffordable” or does not provide MV. In such case, employers face a monthly tax of $250 (up to $3,000 annually) per employee
  • Tax is assessed only on employees who receive a subsidy to buy coverage
  • Medicade and Medicare enrollees are not eligible for subsidies if the employer offers MEC

Penalties Under the “Pay” Option

  • The employer pays a tax if it does not offer MEC to 70% of its full-time employees and their dependent children under age 26
  • The monthly tax is $167 (up to $2,000 annually) per employee on all full-time employees, excluding the first 80
  • Penalties are not tax-deductible

The Look-Back Rule

  • The “look-back” is a measurement period during which an employee must work full-time (average of at least 30 hours per week) before the employer must play or pay
  • Staffing companies may use a look-back period of up to 12 months to determine which of their full-time employees are eligible for benefits

How Staffing Firms May Apply the Look-Back
Under the ACA, the look-back rule applies only to:

  • Employees that are “ongoing” and who have worked for at least one year
  • New variable-hour employees
  • Seasonal employees
  • The look-back rule does not apply to: Nonvariable-hour employees

Client Responsibilities Under the ACA

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