New Obamacare regulations released last week could impact a number of staffing and recruiting firms. The final employer mandate regulations of the Affordable Care Act (ACA or Obamacare) implements some delays and provides some clarification on issues concerning the staffing industry.
The employer mandate provision of the ACA will require employers with 50 or more full-time or full-time equivalent employees to provide healthcare insurance to their full-time employees.
Because W-2 contractors on a firm's payroll count toward the 50-employee threshold, this provision is of major concern to staffing and recruiting firms that run a healthy contracting business through their own back-office.
They got a reprieve last year when it was announced that the employer mandate would be delayed until January 1, 2015.
Now the final regulations offer some additional “transition relief” for the first year of the mandate:
- If employers with between 50 and 99 employees can certify they did not reduce their workforce to delay the requirements, they will not have to comply with the employer mandate until 2016.
- In 2015, employers with 100 or more employees will only need to provide 70% of their workforce with healthcare insurance. They will have to start covering 95% of their employees as originally intended in 2016.
- For 2015 only, the penalty for not offering coverage for those with 100 employees will be $2,000 per employee minus the first 80 employees if even one employee gets a federal premium credit to purchase insurance through The Marketplace. Only 30 employees will be excluded from the calculation starting in 2016, as the proposed regulations had required.
- Employers can average their number of full-time and full-time equivalent employees from the last 6 months of 2014 instead of having to evaluate the whole year to determine whether they will have to provide coverage in 2015.
- Employers that must comply in 2015 but have plan years that do not start on on January 1 do not have to start complying until the start of their plan year.
The final regulations also confirmed that staffing firms can use a look-back period to determine if variable-hour employees have to be covered, and it provided guidance on how to apply that method. Firms can review the final regulations to see specific examples. The rules stated that:
- You should consider an employee to be full-time, not a variable-hour employee, if you reasonably expect from the start that they will be working 30 or more hours per week. No look-back period should be applied in this case, and the employee should be eligible for insurance.
- You should also consider the following factors when deciding whether an employee can be considered as variable-hour:
- Do they have the right to reject future offers from the staffing firm?
- Do they typically have periods without contract assignments?
- Are they typically offered assignments that vary in lengths?
- Do the assignments typically last less than 13 weeks?
- An individual can be considered as a new employee subject to a new measurement period if they have had a break in service of at least 13 weeks. The proposed regulations required a break in service of at least 26 weeks.
While these final regulations give employers, including recruiters and staffing firms, a little breathing room, there is still a lot of confusion and uncertainty. Even if the employer mandate doesn't apply to your firm, you may have other responsibilities under the law. Additionally, client companies often look to recruiters as resources regarding this and other employment laws. Therefore, you will want to stay up-to-date on the latest developments surrounding the ACA. We will continue to keep you informed on this very important issue.
This article is for informational purposes only and should not be considered legal advice.
Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.