Affordable Care Creates Demand for HR Outsourcing & PEOs
There is no question that the (PPACA) Patient Protection and Affordable Care Act and Healthcare Reform has created the greatest opportunity for the PEO industry in decades. Employee leasing companies, HR outsourcing firms, benefits administration and health insurance enrollment specialists are ramping up to assist small and mid sized business owners and non profit organizations with implementing the Affordable Care Act, and complying with all the new rules and regulations.
Costs - Credits - Penalties - New Reporting For All
The complexities and costs associated with the Patient Protection and Affordable Care Act can be too overwhelming for the average small and mid-sized companies. Under health care reform, all group health plans are required to provide a minimum level of coverage for medical expenses. This could mean higher premiums for plans providing richer coverage than before. Limited benefit and high deductible health plans will not qualify under the PPACA.
Small business owners, described as 25 employees or less, can qualify for a premium tax credit. The credits are calculated based on the number of employees, average wage base, and the premiums paid by the employer to cover their staff and workers. Low wage paying employers with 15 employees or less, can expect to qualify for a credit of up to 50% of their premiums.
The Affordable Care Act requires employers with 50 full-time employees or more (based on 30 hours per week and over) to provide affordable health insurance coverage for their employees or pay a $2,000 penalty per full time employee, excluding the first 30. This is often referred to as “play or pay” by individuals and representatives of the health insurance industry. Businesses and organizations who employ workers at the legal threshold should make certain they are in compliance at all times. The law requires a formula that measures the hours of full and part time workers to determine the total number of full time equivalent workers that an organization employs.
Larger employers must make certain that low wage employees do not contribute more than 9.5% of their earnings for their coverage. In addition to testing for full time workers,there are additional considerations for seasonal and short term workers. This can making testing especially complicated for construction, farming, health care, hotels and restaurants, landscaping, maintenance, schools, and the staffing industry. Under the PPACA, the IRS has instituted new regulations for reporting employer paid contributions for health insurance benefits that affects companies of all sizes.
PEOs - Health Reform’s Best Kept Secret
Employee leasing, personnel management, and Professional Employer Organizations are uniquely qualified to provide the solution. PEO’s provide companies with a comprehensive integrated solution that entails the administration and processing of payroll, they calculate and submit payroll taxes accurately and on time, and submit all payroll reports with the required information to your local, state and federal agencies making certain that your organization is in full compliance.
“The PEO Industry is in the best position to tackle all the complexities of administering and complying with the Affordable Care Act and Health Care Reform.”
“The trouble is that I don’t hear enough employee leasing companies and professional employer organizations telling the business community exactly what it is that PEOs do, how we can relieve them of problems of dealing with health care reform, and help them stay focused on running their business.”
Some larger professional employers offer a choice of health insurance plans that have been tested to assure compliance with the PPACA. Many PEO’s can assist larger companies with testing for determining full time equivalents and contribution strategies to attain “safe harbor” status to avoid facing a $3,000 contribution penalty, should an employee obtain coverage in the public exchange instead of opting for the company’s group health plan.
Inspirity - Getting The Message Out
“Health care reform has generated over 15,000 pages of regulations filled with increased complexities, compliance and cost for your business. You can spend the time and money to figure it out, or you can …..”
Paul Sarvardi - CEO Inspirity
Complying with health care reform will affect every employer in some way. Depending on the size and structure of an organization’s workforce, the remedies and requirements may be unique to your organization, even in the same industry. This is why the administrative capabilities, benefits expertise, human resource information technology, and payroll systems of HR Outsourcing and Professional Employer Organizations can be invaluable today, and in the future.