Healthcare reform is changing employee tracking requirements for the staffing industry

Posted by Bond Team | June 28, 2013 |

Healthcare reform is making significant changes to the way small- to-medium-sized businesses are conducting internal affairs besides upgrading to recruiting software. The Patient Protection and Affordable Healthcare Act signed by President Barack Obama in 2010 is making sweeping alterations to the healthcare system, and impacting staffing and recruiting firms. The biggest concern is the requirement for employers to offer health insurance coverage to full-time employees or face paying tax penalties. For staffing companies, it means more tracking of employees.

However, according to the American Staffing Association, the new “look-back” rule that was recently approved by the Obama administration is intended to reduce the penalties a staffing firm could face. As a result of all the confusion, the ASA has created an online calculator and documents that will outline the possible paths a recruiting firm may take to comply with new regulations. The rule requires staffing companies to add or enhance the tracking of their employees to ensure eligibility and compliance. This is something that their staffing software should be able to handle with efficiency so that it does not adversely impact internal staff productivity.

New healthcare act compliance principles released
“The ASA Statement of Principles demonstrates the staffing industry’s firm commitment to compliance with the Patient Protection and Affordable Care Act and its ongoing commitment to the well-being of the individuals staffing firms employ every day,” said Richard Wahlquist, ASA president and chief executive officer. “Staffing firms will work closely with clients and human resource professionals to help them understand how the health care law applies to their use of staffing services. And staffing firms will work closely with their temporary and contract employees to ensure they understand their rights, opportunities, and obligations under the ACA.” 

The principles drafted by the ASA are intended for staffing firms to share with clients when a discussion must be had over the additional costs associated with compliance. Employers must remember to keep track of the compliance calendar to prevent the accrual of various fees and taxes due. A Medicare or Medicaid standard has also been added to the list of required compliance standards. As of January 1, 2013, employers were required to cap flexible spending account contributions at $2,500, the withholding Medicare tax increased from 1.45 percent to 2.35 percent on high-income taxpayers and a new 3.8 percent Medicare tax was imposed on unearned income. So far, according to the ASA timeline, these are the only standards put into place.

However, by October 1, 2013, a staffing and recruiting firm and an employer will have to determine who is taking charge of certain responsibilities. In addition, employers will be required to notify current employees and all new hires following this date about the employer’s health insurance offerings. In addition information about whether there is an available insurance marketplace for public health and whether an employee is eligible for either option is required.

What staffing firms will have to focus on determining in 2013
Those are only the changes made this year that are altering the healthcare industry – others are scheduled to start in 2014. What most staffing companies will have to determine is whether the recruiting organization or the client is the employer of the worker. The law does not specify the entity responsible for healthcare coverage options. 

“Common-law rules will determine who are employers and employees. Staffing firms should be viewed as the employers if they assume, and properly discharge, the employer responsibilities under the law, but certain types of staffing arrangements may be scrutinized to prevent abuses,” according to the ASA guidelines.

The next year will bring interesting changes for staffing and recruiting firms that are faced with potentially making changes on how they classify workers. Agencies looking for further clarification can consult with the ASA and visit the U.S. Department of Health and Human Services website. 

Category: Recruiting

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