What Healthcare Reform Means for Your Business: Pay or Play
Love it or hate it, the Affordable Care Act passed by Congress last year will affect your business. It’s a complicated law, of course, and there are elements yet to be decided on by the judiciary; you will probably want to discuss all the ramifications with your insurance provider. But it seems very likely employers will need to implement plan changes and satisfy new reporting requirements. Also, if the “pay-or-play” mandates now under judicial review are implemented, they will affect whether employers decide to continue to offer health benefits to their employees or perhaps transition to more contingent workers.
Pay or Play
Under the current form of the legislation, beginning in 2014, employers with at least 50 full-time employees will be assessed a penalty of $2,000 annually per full-time employee if they don’t offer “minimum essential coverage” under an “eligible employer-sponsored plan.” In addition, if an employer offers “minimum essential coverage,” but an employee receives subsidized coverage through an open market option, called an “exchange,” the employer may also have to pay a penalty. In other words, an employer might need to pay a penalty for providing coverage that is not adequate to satisfy the regulations.
Contingent Workers and Health Care Reform
The rules concerning “pay-or-play” involve specific calculations to determine the applicability and exact amounts of the penalties, which are determined on a monthly basis. There are some questions around what that means with regard to contingent employees: Are employers responsible for providing the required coverage or are their staffing providers responsible? Unfortunately, there are no pat answers to these questions.
If you use a staffing provider, you should discuss with them which party should provide the required coverage for full-time contingent employees or pay the “pay-or-play” penalty.
Alternatively, you can work out ways fees can be avoided, such as by limiting contingents to part-time hours. If “full-time” is defined as 30 hours per week, you may decide to limit as much of your workforce as possible to that 30-hour cut-off, while turning to staffing firms to supply more of your workforce needs.
If you choose to do that, you will need to cooperate with your staffing companies, and they will have to cooperate with one another. One particular challenge will be posed by workers who provide services for two or more staffing company clients. Someone needs to bear responsibility for those workers’ pay-or-play requirements.
To say the Healthcare Reform Act is complicated in the world of contingent workers is an understatement. But we’re sure the industry will find ways to make it work. If you are a consumer of contingent worker services, you need to be aware of the challenges.