By George Reardon

Already delayed once, the employer mandate portion of the Affordable Care Act takes effect January. Firms with fewer than 100 full-time employees in 2015 and 50 full-time employees after 2015 will be exempt from the ACA employer mandate, greatly simplifying their ACA burdens. Larger firms, though, will have to be ready to comply.

Compliance and cost minimization philosophy. Large employers have choices for compliance and cost minimization. Some involve purchasing or offering insurance, and some don’t.

Some commentators imply that ACA compliance always requires offering health insurance coverage, but not offering coverage is a perfectly compliant choice under the ACA. Naturally, insurance brokers de-emphasize the no-coverage choices. Some organizations have published a kind of loyalty oath to the ACA promoting insurance and discouraging strategies for minimizing ACA costs. And the examples in IRS regulations all assume that employers sponsor plans, although the law allows employers not to sponsor them.

Like other huge new laws, the ACA contains cost-saving opportunities. You don’t create them; they are in the law that Congress passed and the president signed. They might be eliminated someday, but they are the law of the land now, and it isn’t illegal, immoral or unethical to use them for competitive advantage while they last.

Staffing firms must grapple with this law to remain competitive in their business of employment. You can’t employ or assign anyone if you don’t contain costs and price your services to retain customers.

Appoint an expert. ACA compliance and cost minimization are very complicated. The law and regulations fill thousands of pages of bureaucratic text.

Most staffing industry people are more sales- and people-oriented than analytical. If staffing firms assign ACA compliance to a committee of current staff, ACA compliance will be everyone’s unfamiliar and unpleasant extra task but no one’s actual responsibility. Staff functioning with different — and possibly conflicting — goals will make a consistent strategy hard to manage.

Each staffing firm should appoint an “ACA master,” someone who is detail-oriented, curious, adept at spreadsheets and other software, and thoroughly knowledgeable about the law and regulations. This could be one or more full-time positions in large firms or a dedicated portion of an existing job in small firms.

The ACA master would promote cost savings and ensure legal compliance — for offers of insurance, new hire categorizations, termination timing, work rationing, government reporting, forecasting, interfacing with customer billings, use of service tracking software, and other matters. The ACA master should interact directly with the executive management group. If the firm aggressively manages hours and tenure, the ACA master should have enough authority to directly instruct operational personnel to follow the strategy.

Work with insurance brokers. To identify an optimum ACA strategy, a staffing firm must compare the costs of maintaining insurance plans with the costs of a “no plan” strategy. Using insurance agents and brokers is the usual way to explore insurance and self-insurance options.

Staffing-oriented brokers have been striving mightily to develop compliant coverage options for staffing firms. So far, most of the progress has been with self-insured “skinny” plans. “Minimum value” insured plans for commercial assigned employees are scarce, their conditions may be hard to meet, and the critical pricing data for much of the proposed coverage is still pending.

Brokers are licensed professionals who have brought insurance carriers and consumers together for a very long time. Unfortunately, the ACA directly threatens the role of insurance brokers with its emphasis on exchanges and “navigators” and its pressure on agent/broker sales commissions. ACA exchanges are tax-financed governmental agencies or non-profit organizations that have no connection with the insurance business (a kind of institutionalized non-expertise.) ACA navigators get minimal, if any, training and have been shown in some cases to be felons or political operatives.

Ongoing court challenges. Two federal lawsuits wending their way through the courts, the Halbig and King cases, may block ACA subsidies and their related employer penalties in the two-thirds of the states that have not established ACA insurance exchanges. If the government loses this issue (which may require a decision of the United States Supreme Court), all of the “B” penalties for inadequate or unaffordable insurance will disappear in those states, single-state firms will be relieved of the “A” penalty, and multi-state firms will be able to avoid the “A” penalty for full-timers in those states by corporate reorganization. The ultimate results of these cases may not be known until 2015, but you should plan for the outcome alternatives.

Customer contracts. The additional insurance, administrative and penalty costs of ACA will be financed by lower staffing firm margins, lower assigned employee wages, or higher customer bill rates. Some professional lines staffing firms can absorb all of their additional ACA costs and may already insure highly-paid, long assignment employees. However, most commercial staffing firms will not be willing or able to absorb all additional ACA costs.

Virtually all pre-ACA staffing customer contracts fail to allocate the kinds of additional costs that ACA will impose. ACA costs are very different from traditional burden items, so the “burden increase pass-through” clauses that many staffing firms have negotiated with customers will not apply to ACA costs.

If customers agree to absorb additional costs, contracts will have to define the costs, specify the timing and billing issues, define a gross-up tax factor for nondeductible penalties, and allocate the burden among the staffing firm and the customers.

Discrimination concerns. The ACA bans discrimination against applicants or employees on the basis of their eligibility for ACA insurance exchange subsidies. If you sponsor a health plan, you should train your front-line staff to avoid any hiring or assignment practices that might be construed as discrimination against people who receive ACA subsidies or who might be eligible for subsidies.

Tracking software. The ACA requires employers to track a lot of information — especially details about service patterns and timing — for the purposes of government reporting, health plan eligibility, coverage administration, customer cost-sharing and proactive cost control. Pre-ACA software isn’t fully capable of these tasks without significant modifications, so new versions, products and services have been introduced to meet this challenge.

Set measurement periods. Elaborate ACA rules define full-time employees and set deadlines for health plan coverage. You, your ACA master and your insurance administrators need to set your plan year, your standard service measurement period, and your administration periods soon.

Identify cooperative competitors. Some strategies for minimizing ACA costs involve arranging for your assigned employees to work for portions of the year through other separately owned staffing firms, on assignments to customers other than the ones to whom you have sent them. Clearly, this involves a level of trust between the staffing firms using this strategy.

 Collaborate with VMS/MSP programs. Most VMS/MSP programs are not employers of the contingent workforces they manage. That ideally positions them, as “traffic cops,” to manage hours and tenure to minimize ACA costs for their customers and suppliers. If your own strategies sharply reduce or eliminate your ACA costs, you can become a preferred supplier of these programs, and in return the programs can actively help you keep your costs low.

Identify customers with solvable ACA problems. The ACA presents opportunities for staffing firms to help customers minimize their costs through outsourcing arrangements. Customers that are just over the 50-employee “large employer” threshold may be good long-term prospects for outsourcing, along with some large companies that may want to exclude subgroups of employees from their own comprehensive coverage.

Prepare to challenge “B” penalties. If you sponsor a plan, your employees who obtain subsidies from state exchanges may generate “B” penalties, for which you will be billed after the subsidies are awarded. If the subsidies are unwarranted, it will be your burden to challenge them on the basis of minimum value, affordability, employee income or other factors. This process may be similar to the processes for controlling unemployment insurance and workers’ compensation. If you don’t pay attention, the unsupervised costs could get out of hand.

George Reardon is an attorney at law. He can be reached at georgemreardon@aol.com.