The requirements of the Affordable Care Act can greatly affect staffing agencies that supply temporary and/or contract workers. The “pay-or-play” requirements of the Affordable Care Act are important to know if you are to ensure compliance and avoid costly fines.
The requirements took effect on January 1, 2015, and apply to large firms, which are those with 100 or more full-time or “full-time equivalent” employees. (In 2016, that number will go down to 50 full-time employees.) As such, most staffing firms are considered large firms, and are therefore bound by the pay-or-play requirements.
Under the play option, employers are required to offer “minimum essential coverage” to at least 95% of their full-time employees. Minimum essential coverage is defined as being a group plan that covers medical care in the way of “diagnosis, cure, mitigation, treatment or prevention of disease.” This minimum essential coverage must not be unaffordable. A plan is considered unaffordable if an employee’s share of an individual-only plan exceeds 9.5% of his or her gross wages.
The plan must provide benefits of at least 60% to be eligible. Qualified group health plans must also cover certain core services, including physician services, mid-level practitioner services, hospital stays, emergency room visits, pharmacy, imaging services and laboratory services.
Those who fail to offer adequate, affordable coverage to at least 95% of their workforce (and their employees’ dependent children ages 25 and under) will be subjected to the “pay” option. This is assessed in the form of an excise tax of up to $167 monthly or $2,000 annually, multiplied by the number of full-time employees. There is no tax on the first 30 employees. Employers can also be assessed an excise tax of up to $250 monthly or $3,000 annually for any worker who qualifies for a government subsidy to purchase coverage through a health insurance exchange.
To avoid excessive fines and penalties, staffing firms are encouraged to choose the “play” option, especially if they plan to grow.
What are you doing to comply with Affordable Care Act, Play or Pay?