The final employer mandate regulations of the Affordable Care Act (ACA, or Obamacare), provide some relief for recruiting and staffing firms while also addressing areas of particular concern to the staffing industry.
The employer mandate is the provision of the ACA that requires employers with 50 or more full-time or full-time equivalent employees to provide healthcare insurance to their full-time employees. The mandate was originally supposed to be effective on January 1, 2014, but was delayed until January 1, 2015. W-2 contractors that are on a firm’s payroll count toward the 50-employee threshold, so this provision has been a concern for many recruiters who do a healthy contracting business. The final regulations offer some “transition relief” for the first year of the employer mandate:
- Employers with between 50 and 99 employees will not be subject to the employer mandate until 2016, as long as they certify on an official form that they did not reduce their workforce below 99 employees specifically to qualify for this delay.
- Those with 100 or more employees will only need to provide 70% of their workforce with healthcare insurance in 2015. In 2016, they will have to cover 95% of their employees as originally written in the proposed rules.
- In 2015, 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.
- To determine whether they will have to provide coverage in 2015, 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.
- Employers that do have to comply in 2015 but have plan years that do not start on on January 1 can delay compliance until the start of their plan year.
Meanwhile, the final regulations reaffirmed that staffing firms can use a look-back period to determine if variable-hour employees have to be covered, and it clarified how that method is to be applied. The regulations provide some examples to help staffing/recruiting firms determine if employees can be considered variable-hour. Specifically the rules stated that:
- If you reasonably expect from the start that an employee will be working 30 or more hours per week, you should consider that employee to be full-time, not a variable-hour employee. Therefore, no look-back period should be applied and they should be considered eligible for insurance.
- Employers should further consider the following factors when determining whether an employee can be considered as variable-hour:
- Whether the worker has the right to reject future offers from the staffing firm
- Whether employees typically have periods without contract assignments
- Whether employees are typically offered assignments that vary in lengths
- Whether the assignments typically last less than 13 weeks
- Employers can treat an individual as a new employee who is 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.
Overall, these final regulations give employers, including recruiters and staffing firms, a little breathing room. But there is still a lot of confusion and uncertainty surrounding this complex law. Even if you are not impacted by the employer mandate provision of the ACA, there are other portions of the law you may be subject to, and your clients will also likely look to you as a resource regarding this and other employment laws. Therefore, it is important that you stay on top of 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.