By: Joe Kenny
The Affordable Care Act (ACA) is quickly approaching and on January 1st, 2015 this will take effect. What proactive decisions has your organization made to help combat the rising operating costs of doing business? Taking a closer look at the benefits of working with a staffing firm to help offset these costs will be imperative to understanding all of your options.
As of January 1st, 2015, if you have over 50 employees, your organization is considered a large employer, which means that you will have to offer 95% of your employees and their dependents health insurance. The cost of individual insurance must be less than 9.5% of the employee’s household income.
As a large employer, you have to make the decision whether or not you would like to
“play or pay.”
Play: You agree to provide ACA compliant health insurance and offer the insurance to all eligible employees.
Pay: You opt not to provide healthcare insurance, and you would pay a fee of $2,000 per year for each full-time employee on your staff (less the first 50 employees) in year one. Year two the fee would be less the first 30 employees.
As a large employer, this is where you must develop a strategy to stay compliant and minimize the financial impact ACA will have on your bottom line. What you do next is critical to the success of your organization.
Utilizing a staffing firm will help reduce your organization’s financial burden of offering health insurance to your employees. Contingent or Temporary employees will now be offered insurance sponsored by the staffing agencies.
The ACA compliance monitoring is complex and reports for your Full Time Equivalent employee, Part Time, and variable hour employees must be tracked. With the utilization of a staffing firm, temporary service or payrolling services, you will limit your organization’s liability.
Business Growth and reduced hiring risks: This will allow you to build up your staff with qualified temporary workers to help meet demands, without taking on the full responsibility of their employment. (Health Insurance, 401K, Vacation and Sick Days, Employer Tax Burden, etc.)
If business demands continue to stay high, then there will be a built-in promotion for any temporary employee you would like to bring over as your own.
Seasonality of your Business: Utilizing temporary employees gives you the flexibility to bring your operating headcount up or down based on the seasons of your business. By utilizing temporary employees for this circumstance, you will be able to limit your payroll burden and exposure to ACA compliance reporting.
With the utilization of temporary staffing employees, you will gain the flexibility needed to drive out payroll burdens and exposure to compliance related to the ACA, along with being able to flex your staff up or down based on your organization’s needs.
Benefits of Using a Staffing Firm
When making a decision to payroll an employee with a staffing firm, you should consider the benefits associated with doing so. The employee will be paid by the staffing firm — not your organization — which limits your overhead costs (Health Insurance, 401K, Vacation/Sick Days, Employer Tax Burden, etc.)
We hope the information we have covered here leads to your organization discussing this topic internally and developing a responsible and sound strategy to handle ACA requirements. Please keep in mind that if you would like to discuss this further, one of our Business Development Managers will be available to consult with you about your options.