ASA Central Network

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  • 1.  Surcharge for Affordable Health Care Act

    Posted 07-16-2021 12:05
    Edited by Alison Donato 07-16-2021 13:26
    Hello All,

    Do you have a specific dollar amount that you incorporate into your hourly bill rate for "Affordable Health Care Act Surcharge"?  If so, how did you arrive at that number?  Please advise.  Thank you.

    Cheers,

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    Tammy Turner
    Owner
    Kapstone Employment Services
    Detroit MI
    (313) 556-1711
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  • 2.  RE: Surcharge for Affordable Health Care Act

    Posted 07-17-2021 10:55
    Hi Tammy,

    Great question. Many of our work comp solution clients use PEOs and EORs that charge between 5-8 cents/ hour to cover the ACA cost.  These EORs/ PEOs work with about 900 staffing cos, so I believe they reflect a good market sample.

    Stay safe

    David

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    David Schek
    President
    Work Comp Staffing Solutions - LeastStaff.com
    Rockville MD
    (202) 302-1212
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  • 3.  RE: Surcharge for Affordable Health Care Act

    Posted 07-18-2021 14:30

    There are two kinds of ACA surcharges. 

    When the ACA employer mandate was becoming effective, staffing firms had no idea how much it would cost them – in premiums, administration, professional advice, and possibly penalties. Most firms imposed an across-the-board surcharge of a single-digit percentage of each invoice. This preserved their base rates for competitive comparison and facilitated future adjustments of the surcharge as the actual cost of ACA became clear. The across-the-board surcharge did the heavy lifting of paying for staffing firms' ACA costs. 

    Unfortunately, some sloppy IRS language in its employer mandate regulations made a second and different kind of surcharge necessary, and many large staffing customers insisted on contract amendments to mandate it. 

    IRS suggested that it might in the future consider temporary employees to be the employees of the customers, thus placing the customers' ACA compliance percentages in jeopardy and subjecting them to potentially huge penalties. Customers asked IRS if they could claim ACA coverage offered by their staffing firms as coverage offered by the customers to reallocated temporary employees. IRS said, in effect, "Yes, but only if customers pay more for temporaries who are enrolled in the staffing firms' coverage than they do for similar temporaries who are not enrolled." Clearly, an across-the-board surcharge does not satisfy this test, so a second surcharge, which I call "differential billing," would be required. That's the bad news. 

    The good news is that the amount of the differential billing surcharge is not required to be or to approximate the actual cost of providing coverage. It can be a very nominal amount, like $5 per week or $.10 an hour per enrolled person, and there is no rule against bunching the billing of differential surcharges by calendar quarters or years. It is also unnecessary to identify which temporaries are enrolled, protecting customers from being accused of terminating assignments because of ACA coverage. 

    Differential billing is a small inconvenience for staffing firms and their billing vendors, but it is not a significant expense, and it benefits both customers and staffing firms by protecting them from potentially very expensive ACA penalties and indemnity for penalties. 

    By now, staffing firms have had a few years of experience with ACA and should know what it costs them, so, going forward, the across-the-board surcharge can be baked into the regular billing rates like other burden items. Some firms have already done this.



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    George Reardon Esq.
    Principal
    George Reardon, Attorney & Counselor at Law
    Houston TX
    (281) 888-6641
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  • 4.  RE: Surcharge for Affordable Health Care Act

    Posted 07-19-2021 10:25
    There are ACA plans available that offer 100% compliance at no cost to the employer.  Utilizing these plans would eliminate the need to charge costumers, and make you more competitive..

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    Michael J Cleary
    President
    TAC Benefits Group, LLC
    Rockledge, PA 19038
    610-914-3911
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  • 5.  RE: Surcharge for Affordable Health Care Act

    Posted 07-20-2021 15:40
    What Michael Cleary says about ASA coverage (presumably simple MEC plans) is true and can protect employers from the draconian "a" penalty. However, its being cost-free to the staffing firm sponsor does not remove the need for the "differential billing" that I described elsewhere in this discussion.

    It is somewhat counterintuitive to charge customers a differential billing surcharge when the staffing firm is not actually spending any money on the coverage in which assigned employees are enrolled. Nevertheless, charging the differential for enrolled employees is the required condition for protecting customers from potential ACA non-compliance and penalties by allowing them to claim "credit" for the staffing firms' offer of coverage made to assigned employees that IRS may determine to be the customer's common law employees.

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    George Reardon Esq.
    Principal
    George Reardon, Attorney & Counselor at Law
    Houston TX
    (281) 888-6641
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  • 6.  RE: Surcharge for Affordable Health Care Act

    Posted 07-21-2021 08:41
    Michael - the major cost of ACA is compliance through the reporting requirements and proof that someone was offered coverage. The plan itself is not the costly part of ACA. Even if zero employees accept coverage, the cost of compliance for a staffing company does not go away.

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    Elijah Wilde
    President
    Wilde Management Group
    Winnetka IL
    (866) 651-0001
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