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Monica Vomastic column: Staffing industry bracing for health care reform

9:18 PM, Apr. 26, 2013  |  Comments
Vomastic
Vomastic
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The Affordable Care Act will have significant implications across all industries, including the staffing industry. The workforce for a staffing company can be seasonal, long-term contract, temporary to perm, or temporary.

The turnover ratio widely varies between staffing companies, but they all have one thing in common, the average assignment is less than six months. The initial cost and administration to implement ACA would create a major burden under its original mandate.

Historically, it was difficult for staffing firms to provide group health care coverage due to the participation rate being significantly below acceptable insurance risk standards. Why? Most temporary employees decide to self-insure, absorb any health care risks and waive coverage.

As a result, insurance companies introduced new health plans designed exclusively for staffing companies called limited or mini-medical plans. These plans offered essential coverage, but not major medical. The plans are affordable and provide unique features, such as, continued coverage between employment gaps without having to pay for missed weekly premiums and no limitations on pre-existing conditions.

With ACA, these plans would no longer be allowed. However, for part-time employees this is now under review for potential consideration by the administration.

The American Staffing Association has spent considerable hours working with ACA officials, who are writing the rules, to explain the staffing industry's unique business model and the impact of ACA.

Below are some of the administrative guidelines issued by the Department of Labor, Health and Human Services, and the Treasury, which were collectively addressed for the staffing industry:

Look-back period: Staffing firms may use up to a 12 month measurement period called a look-back, to be applied to both existing and new employees. Those employees who worked more than 1560 hours or an average of 30 hours a week will be considered full-time employees and therefore would have to be offered health care coverage, provided they were still employed, or incur a tax penalty.

New employee classification: Under ACA there were only two classifications, full time, greater than 1,560 hours, and part time, fewer than 1,560 hours. Based upon the short duration of the average assignment, a new classification has been created called a "variable" employee - an individual who, based on the facts and circumstance on the individual's start date, cannot be reasonably determined to work full time. Or, if the employee is expected to work full-time initially, but their employment is expected to be of a limited duration, and the employer cannot reasonably determine that the employee will work full time over the course of the measurement period, they would be considered variable. A variable employee would be exempt under ACA, which will be the status for the majority of temporary employees.

These modifications will provide staffing companies with the ability to continue their special business model under ACA without the threat of high tax penalties or significantly higher insurance costs. Over the next few months, expect more changes before all the rules and guidelines are finalized.

- Monica Vomastic is president/CEO of Landmark Staffing Resources in Appleton. She can be reached at landmark@landmarkstaffing.com.

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