Earlier this month, the US Supreme Court began considering oral arguments in a case that could bring massive change to the enforcement of the Affordable Care Act (ACA). According to a recent article in the New York Times, more than 7.5 million Americans in 34 states could be at risk of losing their subsidies should the court rule against the ACA. However, the King v. Burwell case is primarily a challenge against the penalties many employers are facing for improper compliance with ACA regulations. The case alleges that the ACA authorizes tax credits only for individuals who purchase insurance on state-established healthcare exchanges instead of the federal market. A ruling against the ACA would remove penalties for staffing firms, staffing clients and other employers in several states.
The case is extremely important for employers because employer penalties under the ACA are triggered by their workers receiving a subsidy. Currently, there are two different penalties employers currently face. Any employers with over 50 employees, including staffing firms, that do not offer health insurance to at least 95 percent of their full time employees, and who have had at least one employee receiving government subsidies for their health insurance, are subject to a penalty of $2,080 multiplied by all of a company’s full-time workers minus thirty. Even if an staffing firm or employer does offer health insurance, they could still face a separate penalty if their coverage is either unaffordable or below the ACA defined standards. These employers are subject to annual fines of $3,120 for each full-time employee who receives a subsidy to buy health insurance through an exchange.
Should the Supreme Court rule against the ACA, staffing firms could see partial relief from some of these steep penalties, especially in states where the healthcare exchange is run by the federal government. According to the Staffing Industry Analysts, should the proposed changes pass, a staffing firm offering heath insurance in a location that is relying on the federal exchange, such as Texas, would no longer be subject to the $3,120 penalty regarding their employees. If a staffing firm does not offer coverage and at least one worker receives subsidies for a state-bases healthcare exchange, the $2,080 penalty could be calculated based on the staffing firm’s total number of employees, including those in other states. For larger staffing agencies operating in multiple states, navigating these changes could be complicated and problematic.
Even if the court rules in favor of upholding the current ACA regulations, staffing firms could find themselves facing a number of complications adjusting. Staffing is a dynamic and complex industry with many liability risk exposures. At World Wide Specialty Programs, we provide insurance solutions to help the staffing industry manage those risk exposures and protect their assets. Our complete portfolio of staffing insurance policies is available to agents and brokers to help their staffing clients attain the unique coverage then need. To learn more about our operation and our coverage for staffing firms, contact us online or give us a call today at (877) 256-0468.