3 Questions to Ask About ACA Compliance
There has been a lot of information and misinformation swirling around the phased implementation and overall roll out of the Affordable Care Act (ACA). For larger organizations, the kind that rely on a healthy percentage of contract labor as part of their overall workforce, the challenges are even more daunting. Determining whether a staffing supplier should ensure compliance or whether it is an internal responsibility further clouds the answers. So the nextSource Blog is offering a simple, three question checklist to help workforce management personnel cut through some of the clutter and come to some understanding about compliance.
1) How many FTE or full time equivalent employees does a given supplier have? Why does this matter and how does it impact on ACA compliance?
Quite simply, the number of FTEs helps an employer determine if the supplier should be qualified as a small, mid-sized, or large company. Under ACA guidelines, small companies (those with under 50 FTEs) are exempt from having to offer ACA compliant benefits. Unless you have a master vendor arrangement, chances are you have numerous staffing suppliers. It pays to know which are responsible for ACA benefits and which must fall to you. The mid-sized suppliers (with between 50-99 FTEs) have an extra year to meet ACA qualifications. Large suppliers (100+ FTEs) are already under the qualifications now and must be providing compliant benefits.
2) Does your workforce management plan classify all contract workers as W-2 wage earners?
Some staffing companies are have been attempting to skirt the FTE count by classifying their contractors as 1099 freelance workers. This strategy presents problems like suppliers not only subjecting themselves to IRS scrutiny, but these contractors are now misclassified should they seek benefits on the ACA exchanges. The client – as co-employer and listed as the recipient of the suppliers’ services – may be implicated and subject to penalty as well. Penalties are applied for a company of which the worker receiving benefits with subsidy as well as for ALL qualified employees in their workforce. Make sure your suppliers are classifying all your contractors as W-2s.
3) Do suppliers’ benefit packages already meet both affordability and minimum coverage requirements?
The ACA stipulates that benefits packages must meet specific criteria for affordability and must also meet a minimum coverage requirement. Some suppliers may offer affordable packages that don’t meet the minimum coverage requirement. Others provide robust coverage that comes at a premium. It is not enough to meet one of these stipulations but not the other. To be compliant the coverage must meet the requirements and be affordable to even the lowest wage contractor. So make certain that suppliers are meeting both these important prerequisites.
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