After being delayed once already, the Affordable Care Act’s employer mandate will take effect this January. Companies with less than 100 full-time employees in 2015, and less than 50 full-time employees after 2015, won’t be required to comply with the mandate, making it much easier to meet the ACA guidelines. Bigger companies, however, have to comply or face penalties. Here are some tips to make the process easier.
Hire an expert. Complying with the ACA while keeping costs low is a complex process; the regulations make up thousands of pages of convoluted legislative text. Most people who work in the staffing business are sales or “people” people; they don’t have the analytical skills or industry expertise to fully understand the law’s implications.
Appoint an “ACA champion.” If you can’t hire someone externally to help you with the process, consider designating an employee who is detail-oriented and has strong spreadsheet skills to be your ACA champion. You’ll want this person to get up-to-date about the ACA and its regulations so he or she can understand available cost savings while making sure your organization is compliant with the law. This person should report directly to the executive team.
Work with your health plan and/or insurance agent. The quickest and easiest route to an effective ACA strategy is to compare how much it will cost you to maintain health insurance for your employees with your current plan compared with others. Your health plan or insurance agent should be able to help you sort through your options.
Understand current court challenges. There are two federal lawsuits currently making their way through the court system which could block ACA subsidies and their associated penalties for employers in those states that haven’t created an ACA exchange. We may not know the outcomes of these cases until late 2015, but you should plan for alternatives just in case.
Review your contracts. Most commercial staffing firms will not be willing or able to absorb all of the additional insurance, administrative, and penalty costs that come with the ACA. It’s likely that all your pre-ACA customer contracts don’t account for these additional expenses, and that your traditional “burden increase pass-through” won’t cover these new ACA-associated costs.
Assuming your customers agree to absorb at least some of the costs, your contracts will need to define exactly what those costs mean: clarifying timing and billing conflicts, defining nondeductible penalties for a gross-up tax factor, and distributing the cost burden equally.
Address discrimination. The ACA prohibits discrimination against employees and applicants based on their ACA subsidy eligibility. Make sure you train your staff on avoiding any hiring practices that could be seen as discrimination.
Purchase updated software. You’ll need to track a lot of details about proactive cost controls, health plan eligibility, cost sharing and coverage administration for the government. Make sure you have software that’s up to the job.
Create measurement periods. Work with your ACA champion, your health plan and your agent to understand exactly how measurement periods work (they’re very complicated).
Consider cooperative competitors. To minimize ACA costs you may consider pursuing a strategy of having your employees work for certain time periods for other independently owned staffing firms. Obviously you’ll need a certain level of trust to successfully implement this strategy.
Identify low-hanging fruit. It’s likely that you’ll have customers with ACA problems that are easily solved with tactics like outsourcing arrangements. Those customers who are just over the 50-employee “large employer” threshold could potentially be good long-term candidates for outsourcing, as well as those companies who possibly want to exclude subgroups of employees from comprehensive coverage.
Be prepared to protest “B” penalties. For those staffing companies that sponsor a plan, your employees eligible for state exchange subsidies could generate “B” penalties, and you’ll be billed after the subsidies are given. But if the subsidies are unjustifiable, it’s your burden to protest the penalties based on affordability, income, minimum value, and other factors. It’s a similar process to controlling unemployment insurance or workers’ compensation costs; you simply need to pay attention before costs become unmanageable.
For more information on how staffing firms can implement ACA strategies, contact us to learn more.