How the ACA Affects Southern Temp Employers

Posted June 13, 2014

Since it first went into effect in 2010, the Affordable Care Act has raised questions for every staffing firm. And it’s not easy for the firms to find the answers! How is it going to affect the way Southern staffing firms operate?

What are the key points of the ACA that a staffing firm should be considering?

With a new roll-out date of January 1, 2015, staffing firms have gained an extra year to fine-tune their strategies by focusing on:

  • The length of the look-back period you’ll choose
  • The decision whether to provide health benefits or simply pay the penalty
  • The amount of coverage you should provide, if you decide to offer benefits

How does the ACA define a full-time employee?

According to the ACA, a full time employee is someone who works:

  • A minimum of 30 hours per week
  • 130 hours per month
  • A total of 1,560 hours in a year.

What is the “look back” period and how does that impact a staffing firm?

The “look back” period is designed to help employers with fluctuating workforce numbers determine what their true “full time” headcount is over a given period of time. Calculating this number will determine your company’s obligation for the number of people you need to provide health insurance coverage for—or the number of penalties you’ll pay. The length of the look back can be anywhere from 3 months to 12 months.

The length of the look back period also determines the length of future time that you’ll be obligated to provide coverage for that headcount. In general, for staffing firms, the longer look back is more beneficial—It will eliminate many shorter term employees from the equation.

How can technology support the staffing industry in complying with the ACA?

Staffing companies may find it difficult to navigate the complications of the ACA’s conditions and metrics. The right software can help a staffing firm prepare for ACA readiness by:

Calculating the average number of hours an employee has worked over a period of time

  • Reporting on the total number of accrued hours an employee has worked over that same period of time
  • Showing whether they should use the ‘look back period’ of 3 month or 12 month period to determine eligibility

What else can we do in 2014 to get ready?

  • Create your healthcare coverage plan, by choosing which insurance company to work with and the level of benefits you’ll provide
  • Determine how the additional costs are going to be absorbed, whether by passing them off to clients, streamlining operations to account for reduced margins, or a combination of both
  • Look at any Master Service Agreements to make sure that any multi-year contracts take any ACA-related fee increases into account.

Any questions? Call Team Ambassador. We’re happy to share our knowledge of this complicated legislation.