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ACA Compliance Reporting for Staffing Agencies


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ACA Compliance Reporting for Staffing AgenciesStaffing agencies have been one of the industries that have found ACA compliance especially challenging. Agencies have a high turnover rate, mostly part-time employees, and unusual pay rates.

So as an agency, what can you do to ensure you’re complying with ACA reporting laws?

The first step is to be aware of the requirements you face. Secondly, you want to find an ACA reporting service that makes it easy for you to seamlessly keep up with the law while you focus on your day-to-day work.

Here’s what you need to know to keep up with ACA compliance for staffing.

Who is in Charge of Health Insurance?

The first question is to determine who actually employs the workers. Is it your client or your agency? The IRS has a specific test that will help you determine who controls the worker and is thus responsible for health coverage.

Determine which company controls or has the right to control the worker. Determine how the worker does their job or controls and administers the financial aspects of the business. Many agencies control placements and pay, so they would be considered the employer.

If your agency simply acts as an intermediary to connect workers and businesses but doesn’t administer the details, you are probably not the employer and would not be responsible for ACA compliance.

How to Count your FTEs

ACA compliance for staffing agencies is based on the number of Full-Time Equivalent (FTE) employees you have. However, the nature of an employment agency means that it’s harder to count than it is for other companies.

Watch our “Are You an ALE?” video for more help on this.

Accurate reporting is challenging, which is why it’s especially important to have a solution that can help you count and report hours accurately. You can also take advantage of the IRS’ look-back provision, which allows you to choose a period between 3 and 12 months in the last year and determine average hours from that.

If you have 50 or more FTEs, you are an Applicable Large Employer and have to offer benefits to all employees that average 30 hours a week or more. The 30 hours a week applies even if a worker gets there by working part-time at multiple locations per week.

How to Offer Coverage to Employees

If you do have to offer health insurance, where do you go to get it?

When looking for appropriate coverage, remember that it must cover at least 60% of covered services. You can require that your full-time employees contribute toward health insurance, but the cost cannot be more than 9.78% of their household income in 2020.

Read about affordability percentages, and try our free Affordability Calculator.

You can call around to a variety of health insurance companies to ask what their employee packages are. Keep in mind that you will get more favorable per-employee rates if you have more full-time employees that participate, but the cost of additional employees may still result in a higher cost to your agency.

How to Handle the Cost of Offering Coverage

Of course, the cost of coverage, administration, and ACA compliance for staffing has to be addressed as well. It may mean increasing your rates to clients, or you may be able to make your office more efficient.

If you’re required to offer insurance, consider making that a benefit to draw in more qualified workers. Let employers know that your placements have their health benefits covered. It doesn’t have to be a drawback, it can be a benefit that helps you gain additional clients and command a higher rate.

Another thing to keep in mind is that even if affordable coverage (according to the law) is offered, it’s possible that your over-30-hour employees won’t take you up on the offer. That may keep costs down, but it also makes them unpredictable.

It’s also possible that your group plan pricing will change — if you expect 50 people to enroll and only 20 do, you might not qualify for the rates you were initially offered.

By planning ahead, you can monitor hours and absorb costs appropriately. The key is to not get caught by surprise.

How to Report Coverage Ending Without Termination Dates

Many staffing companies don’t track traditional termination dates for employees. Rather, employees are placed on temporary assignments that start and stop throughout the year. Whether or not an employee will be given another assignment at the point in time when the current assignment ends is unknown.

The process of going through a “termination” of the employee would mean that an on boarding event would have to occur prior to placing the employee on another assignment. Without a termination date to work from, the offer of coverage for that employee may not end (by ACA definition) for as long as 18 months. For this reason, it can be difficult to report ACA offers of coverage in a way that makes sense organizationally. As a result, many staffing companies will “assume” termination for employees that haven’t been on assignment for several weeks. Having a system that can automate this termination process can be very helpful.

Have a Solution that makes ACA Compliance for Staffing Firms Easier

The keys to compliance are that you understand who’s responsible for the health insurance, along with how many FTEs you have, and how you’ll handle the cost of offering coverage. But all of this also has to be recorded and reported to the IRS.

Rather than wasting dozens of hours filling out forms and going back through records, use an ACA reporting solution that can take care of things for you. With Integrity Data’s ACA compliance solution, you can keep your records up to date no matter what payroll or ERP system you use.

When you outsource your ACA reporting to us, you can go back to focusing on what’s truly important — the growth and success of your agency.

If you’re ready to see what seamless ACA compliance for staffing agencies looks like, give us a call. We’d love to show you what we can do to help you be more successful. Contact us today!

Written by Integrity Data

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