The Obama administration announced earlier this month that it will allow businesses an extra year to comply with the Patient Protection and Affordable Care Act (ACA).
The law was originally slated to kick in Jan. 1, 2014 but the date for compliance has now been pushed back to Jan. 1, 2015. It will then mandate employers with 50 or more employees to offer minimum-value insurance and cover 95 percent of those workers through so-called employer shared responsibility requirements.
What should healthcare staffing agencies expect from this adjustment and from the ACA itself?
The announcement gives employers time to study whether or not complying with this facet of the law is in their best interest and plan accordingly. They will still have the option to “play,” meaning comply, or “pay” the government-mandated fine for non-compliance when the time comes.
The delay will benefit larger organizations that were prepared to remain well above the 50-employee threshold. Reporting requirements to the Internal Revenue Service (IRS) can now get pushed back a year for employers, insurers and other reporting entities without fear of penalty.
The reason behind the administration’s announcement to allow employers an extra year to prepare for implementation centered on the “complexity of the requirements and the need for more time to implement them effectively,” according to the Department of the Treasury.
Treasury also put forth two goals: (1) simplification of the new reporting requirements consistent with the law, and (2) adaptation of the health coverage and reporting systems.
Industry analysts have differing views on the influence of the act itself.
Justin Junkel, vice president of finance and analytics at Pinnacle anticipates four major developments as a result of the health care law:
- Companies will transition lower-skilled workers to shifts of less than 30 hours per week.
- Staffing firms will increase markups or bill rates to offset the costs of providing healthcare coverage and the associated administrative expenses.
- Health plans will adjust their costs to fall closer to the ACA minimums.
- The overall cost of healthcare coverage will rise over time, as companies make process changes to comply with ACA requirements.
Junkel also noted, “The ACA will result in cost increases for staffing firms, due to the requirement of providing healthcare coverage to previously uncovered employees or paying the taxes associated with not providing affordable coverage.”
Jeanne Knutzen, founder and CEO of the PACE Staffing Network, said:
“We are anticipating that the costs to become fully compliant with the law will require most staffing companies to ask for a two-to-four percent increase in client bill rates, just to break even; anywhere from 16 to 35 cents per hour.”
The ACA could help the temporary staffing industry in this way: some companies will want to remain below the 50-employee marker and turn to agencies with temporary and part-time labor.
Jay Hancock of Kaiser Health News said, “By requiring employer coverage only for those who put in at least 30 hours a week, the act appears to create an incentive for companies to do less with permanent workers and more with part-timers, which are the main focus of staffing agencies.”
Another workaround for the industry could be a regulation the IRS created last year known as the "look-back/stability period safe harbor method.” It essentially gives employers of “variable hour” labor, like staffing agencies, 12 months to determine whether or not an employee is a temporary worker or full-time worker deserving of health care benefits.
Bernard Wolfson of MEDCITY News noted, “The Affordable Care Act probably presents the biggest challenges to employers in industries that use a lot of part-time and seasonal workers. Their hours can vary dramatically from week to week or month to month, making it difficult to calculate who is eligible for benefits and who is not.”
The emerging consensus is the ACA is a complicated law that has the potential to impact companies positively or negatively once it is implemented. Companies that will be influenced now have more time to get out in front of the issues associated with the act, but understanding and implementing a strategic plan for the future is essential.