What Staffing Firms Should Consider with the ACA for 2015

Staffing Agency ACA PlanningWe’re nearly two months in since the Employer Mandate became effective. Employers who strategically addressed their potential liability in 2014 are getting back to business as usual while others are (finally) realizing that the law isn’t going away and that they need to address potential issues before the year gets any older. In conversations with the latter, four topics almost always come up: [more]

1.  Get your head out of the sand: 

Was your staffing company able to escape the Employer Mandate in 2015 by having fewer than 100 Full-Time and Full-Time Equivalent employees in 2014? Keep in mind that the definition of a Large Employer reverts to 50 for 2016. Take advantage of the extra year. Evaluate your workforce by the end of Q3 and determine whether it is likely that you are going to be a Large Employer in 2016. If you are, decide if you are going to offer insurance to your eligible employees, determine whom those employees are, and secure coverage for them.

2.  Speaking of Coverage: 

In November of 2014, the IRS issued a notice that effectively killed certain types of Minimum Value Plans that did not offer in-patient hospitalization services. The silver lining was that these plans would still be considered minimum value for those employers who secured them prior to the notice. Similarly, Minimum Essential Coverage plans, sometimes referred to as “skinny plans”, may be under scrutiny by the Feds as not being in line with the intent of the ACA since these types of plans offer little more than wellness and preventative coverage. Large Employers should absolutely be offering these, as the employee is typically responsible for the entire cost of premium.  Hopefully these plans remain a viable option for employers looking to mitigate at least some of their potential liability. If not, securing coverage before they are deemed unacceptable may allow employers to be grandfathered in for a short period of time.

3.  80 is the new 30: 

Even if you are an Applicable Large Employer under the ACA, your potential liability could be minimal in 2015 for not offering coverage or failing to offer coverage that is affordable or does not meet minimum value. Due to transitional relief for 2015, employers can take advantage of an 80 employee carve-out for purposes of determining their liability. For example, an Applicable Large Employer in 2015 who has only 50 eligible, full-time employees would pay nothing in penalty for failing to offer coverage. In 2016, that carve-out drops to 30 and that same Large Employer’s liability would be $40,000 (50-30 x $2,000).

4.  Client Paranoia: 

In the traditional staffing model, the staffing firm is usually the common law employer of a temporary employee based upon a long-standing, multi-factor IRS test. However, there may be cases where circumstances cause the IRS to view an employee as the common law employee of the client rather than the staffing firm. Because of this possibility, many clients are requiring staffing firms to offer insurance to those temporary employees placed with the client, presumably to protect the client from penalties in such a scenario. While there is an agency provision within the law that may allow for such an arrangement, it requires the client to pay the temp agency a higher fee for those employees who elect coverage.

For more resources visit the Staffing Industry ACA Planning section of our website.

This article is made for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney in your state. The information in this article may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct or up-to-date.