How does the Patient Protection and Affordable Care Act (PPACA) or the Affordable Care Act (ACA) affect employers? This law was enacted in 2010. Sometimes called “Obamacare,” this law put into place insurance reforms that have already begun to roll out and will continue through the next several years. One of these reforms requires large companies to offer health insurance coverage to full-time workers.
A large employer is defined as having 50 or more full time or full-time equivalent employees. A full-time employee works 130 or more hours per month, or 30 hours a week, minimum. Part time employees and seasonal labor that work 120 or more hours per month are equal to one full-time equivalent employee. Temporary employees do not typically count in determining an employer’s status. Employers with 50 or more full time or full-time equivalent employees will be required to provide insurance coverage or pay a hefty assessment starting in 2014.
What does that mean for businesses? Well, some businesses are taking drastic measures to avoid the “employer mandate” and the need to provide insurance coverage. While some have cut employee hours and others have stopped hiring, still others are planning to use contractors to help meet their business needs. Attempting to simply change a worker’s status from employer to contractor doesn’t necessarily exempt the employer from the mandate. There are specific rules and guidelines that the IRS has put into place that protect employees from misclassification. While using temporary employees or contractors to fulfill staffing needs is perfectly acceptable, businesses should avoid reclassifying employees in an attempt to avoid the employer mandate. Contract workers use a 1099 to report income – and the IRS will likely be doing intensive audits on companies who have moved employees from a W2 to a 1099. While meeting staffing needs is important, trying to escape the employer mandate for coverage isn’t recommended.
So what can you do? It is suggested that employers use workers from legitimate staffing firms. This way, the staffing need is met for short term or contract workers but your business is not obligated to provide insurance coverage. The staffing firm would, however, be responsible for providing coverage or options for their employees.
Looking for a staffing firm to help your organization address the demands of the ACA? Integrity Staffing is committed to partnering with our clients to address these new concerns. If you have any questions about how the ACA might impact your business, please contact us at (888) 458-8367.