Love it or loathe it, the Affordable Care Act (ACA) is a reality for businesses.
While portions of the bill have been implemented since its 2010 passage, the major provisions don’t take effect until 2014. This year it is important to be in-the-know about how the ACA will impact your business–either that, or get blindsided by penalties and fines. It is also important to keep in mind, though, that anything that creates turmoil also creates opportunity.
One industry most affected by the ACA is medical staffing. Healthcare reform impacts staffing in two major ways: For one, they have to deal with the employer mandate to provide coverage to their own full-time employees. This could mean major changes to the structure of their business, and in their funding needs. The second major impact is on their clients. They might need to restructure as well, so medical staffing agencies should be prepared to assist them in expanding their health professional workforce without triggering tax penalties.
So now, the question is what exactly does the ACA demand in terms of employer obligations? There seems to be a lot of confusion and misinformation for business owners, so here is a breakdown of the most important section to medical staffing agencies:
“Play or Pay” Rules
While the ACA does not obligate an employer to offer health care to employees, fines will be imposed beginning in 2014 if an Applicable Larger Employee (ALE) does not. ALEs are employers with 50 or more full-time equivalent employees (FTEEs). The penalty for ALEs choosing not to participate is $2,000 times the number of legitimate full-time employees (FTEs) over the number 30. For example, if a nursing home has 50 employees working the equivalent of full time, does not offer health insurance, and has 45 regular full-time employees, it will pay $30,000 in fines (15*$2,000).
Even if an ALE does offer a group health plan, they will still have to pay if it is not affordable. The ACA defines ‘not affordable’ as over 9.5% of the employee’s household income—if the group plan premiums are over that, then the business will have to pay $3,000 times the number of regular full-time employees over 30.
Health care companies with over 50 employees may manipulate their workforce in order to pay the least amount possible. Changing the cost structure of their health care company to avoid penalties could mean changing from permanent to temporary workers. Medical staffing agencies, therefore, have an opportunity for major growth—and with major growth comes major capital needs.
The second big implication is that staffing agencies with over 50 employees will have to deal with the new taxes themselves. In an industry where each agency employs many people at relatively low rates, their size is likely to trigger the healthcare tax and they will have to offer insurance where before they likely did not. This means another financial obligation for the staffing firm that must be paid, along with expenses like payroll and taxes—and this is where factoring comes in.
Factoring companies and brokers should take notice of the bold print: medical staffing agencies are going to need more funding than ever, both for their continuing growth and for their coming financial obligations. Medical staffing is perfectly suited for factoring because of the long payment wait times that the agencies face when billing medical providers, and because the customers of the agencies are often creditworthy. However, not all factoring companies have the medical industry expertise to handle the nuances of medical staffing.
PRN Funding, on the other hand, is a niche factor that deals exclusively with suppliers of products and services to healthcare institutions. Medical staffing is one of our particular specialties, and we welcome all referrals that you cannot find a factor for otherwise.