ACA Administrative Challenges — and Tips to Overcome Them

ACA Administrative Challenges — and Tips to Overcome Them

It has been six months since the official rollout of the Affordable Care Act.  How’s it going?  Has it been seamless, or were you dealt a few surprises?

Employers who work with a transient workforce have their own unique challenges when it comes to rolling out the ACA. The biggest of these trials appear to be from an Administrative standpoint due to the nature of staffing. From enrollment, to missed premium deductions, to reporting, to charging your customer, many staffing owners are hitting their heads against the wall.

Enrollment challenges & verifying offers of coverage
One of the challenges specific to staffing companies is how to verify you have offered affordable, minimum value coverage to 95 percent or more of your full time employees. Determining who is a full time employee can be quite a challenge given such factors as variable hours, Lookback rules, assignment changes and more. It’s critical that this assessment of who is or isn’t a full time employee is correct. You risk the entire A penalty if it’s incorrect and 95 percent of employees have not been offered coverage.

Investigating a Benefit Administrative Solution is one option.  When investigating a benefit solution partner, make sure to factor in that every employee needs to go through the benefit system. The cost will relate to the number of W2s you have in the year, not who you pay each week. These systems offer tools to help you determine if your employees should be classified as full time. These tools will look at each individual employee and ask questions regarding their employment. The answers are given weighted averages, and at the end you’ll receive a report indicating whether an employee should be classified as full time. Using a tool such as this will then give you a record of your evaluation method, which can be important should you ever be audited for compliance.

Premium challenges
99 percent of any type of insurance is for monthly coverage. That also means that coverage premiums are billed and paid monthly. This can be difficult to manage in a traditional industry where employees are long-term. It becomes a major challenge when working in the staffing industry where employees may not work a full month.  

What happens when there are missed premium deductions due to employees working one week but not the next? Do you double deduct the next week (which could be very burdensome depending on the amount) or terminate coverage for the employee? Either method will result in high employee dissatisfaction and possibly penalties due to termination of coverage.

What are your options? Does your provider offer a direct pay option?  This option is the same option utilized by the Federal and State Exchanges. You move the employee payment for ACA coverage outside the payroll. This option removes the administrative burden with tracking premium deductions and doesn’t add costs to your staffing company.  The employee is required to set up and pay for their ACA coverage outside of their payroll. With this option, as an employer, you set up your contributions based on ACA Safe Harbor and Affordability Provisions. You also set up an ACH Account for employer contributions. You receive a draft on the same day each month, but only for those employees that paid their portion.

Reporting Challenges
Beginning January 2016, all employers are required to report certain information:  

  • You or your payroll provider will be required to report additional information in Box 14 of the W2.  
  • Preparing the Form 6055/6056 — this includes information about the entity providing the coverage, including contact information; which individuals are enrolled in coverage, with identifying information and the months for which they were covered; information about the employer offering coverage, including contact information and the number of full-time employees; as well as for each full-time employee information about the coverage (if any) offered to  the employee, by month, including the lowest employee cost of self-only coverage.
  • Preparing the Form 1094/1095

Essentially, you must track what’s going on with your ACA coverage on an ongoing basis every month by group and by individual. The forms can get quite complicated, so it’s important to have a system in place to accurately record this information. A Benefit Administrative Solution can help you with this as well. All this information becomes automated, and reports are generated as needed.  

Lastly, what are your customers saying?
Just because you are not considered a Large Employer (100 full-time or full-time equivalent in 2015 and 50 for 2016) many staffing owners are feeling pressure from customers to offer minimum value plans. What will you do?  

While there are many administrative challenges while implementing the ACA that unique to staffing companies, there are also solutions specific to their needs. For more information about these challenges and solutions, please watch our May Industry Insider Webinar, ACA Update for the Staffing Industry: Administrative Challenges in an ACA World, by clicking here.