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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, significantly impacting the healthcare staffing industry. 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.
Understanding the Affordable Care Act (ACA) and Its Impact on Medical Staffing Agencies
The Affordable Care Act (ACA) has significantly reshaped the landscape for medical staffing agencies, introducing a host of new regulations and requirements that these agencies must navigate. One of the cornerstone elements of the ACA is the employer mandate, which obligates applicable large employers (ALEs) to offer health coverage to their full-time employees or face substantial penalties. For medical staffing agencies, this means a thorough understanding of the ACA is essential to ensure compliance and avoid financial repercussions.
Medical staffing agencies must first determine if they qualify as ALEs, which involves calculating the number of full-time equivalent employees (FTEEs). If an agency meets the threshold, it must then ensure that the health coverage offered is affordable and meets minimum value standards. This can be particularly challenging for agencies with variable-hour employees or those that rely heavily on temporary staffing firms. The ACA’s regulations also necessitate a reevaluation of workforce management strategies, including the use of staffing firms and vendor management companies.
To comply with the ACA, medical staffing agencies must grasp the common law test, which helps determine the employer-employee relationship. This test is crucial in establishing whether an agency is responsible for providing health coverage to its employees. Additionally, agencies must be aware of the different staffing models and their implications under the ACA. For instance, temporary staffing firms are typically considered the common law employer of the worker, whereas professional employer organizations (PEOs) may offer coverage on behalf of a client. Understanding these nuances is vital for medical staffing agencies to navigate the complexities of the ACA effectively.
Medical Staffing Agencies
One industry most affected by the Affordable Care Act 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 ACA’s regulations have created significant financial challenges for the healthcare staffing business, necessitating innovative financial solutions. 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 for Full Time Equivalent Employees
While the ACA does not obligate an employer to offer healthcare 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 or nurse staffing agencies have 50 employees working the equivalent of full time, do not offer health insurance, and have 45 regular full-time employees, they 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.
Implications for the Healthcare Staffing Industry
Healthcare companies with over 50 employees may manipulate their workforce in order to pay the least amount possible. Changing the cost structure of their healthcare 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, making payroll funding a crucial solution. This is where invoice factoring comes in, providing the necessary funds to cover payroll and other expenses.
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.
How Factoring Supports Healthcare Staffing Businesses
Factoring is a powerful financial tool that can provide healthcare staffing businesses with the liquidity they need to thrive, especially in the face of the ACA’s stringent regulations. By factoring invoices, healthcare staffing agencies can unlock working capital, ensuring they have the necessary funds to meet their financial obligations promptly. This is particularly crucial for agencies that employ variable-hour workers or rely on temporary staffing firms, as the ACA’s requirements can create significant cash flow challenges.
Factoring offers healthcare staffing businesses the flexibility to adapt to changing market conditions. With immediate access to cash flow, agencies can seize new opportunities and expand their operations without the financial strain. This financial solution also helps reduce the stress associated with managing cash flow, allowing agencies to focus on their core business activities. By partnering with a factoring company, healthcare staffing agencies can improve their cash flow management, ensuring they have the resources needed to comply with the ACA and support their growth.
