To Appeal or Not Appeal

When the news broke that the Affordable Care Act was going into effect , more commonly known as Obamacare, industries leaders across the board were faced with an interesting situation that there predecessors only imagined. I estimated many questions arose regarding how to tackle the new law; questions such as “How can I realign the healthcare infrastructure of my company to get in compliance with the new law on the books? What is there to consider? Size?  Industry?  Worker Comp Codes?  Are there “grandfathered’ loop holes?” Just to name a few. Within the staffing world things are no different. The ACA and getting in compliance with all aspects of it, continues to effect client rates, sales negotiations, and the overall approach of the industry as a whole.

As companies began to readjust their healthcare structure to align themselves with the ACA, the government naturally sent out alerts to let them know where they still needed to focus compliance efforts. As of May, the American Staffing Association reported that many of the staffing companies throughout the country had received few alerts from the government regarding which employees were, at that time, eligible to receive a premium tax credit and had enrolled in Marketplace coverage. Although, early reports indicate the number of notices have been limited in comparison to the size of the staffing industry, potentially, this lack of notification to these companies could result in an employer tax assessment. More specifically, “staffing firms that offered minimum essential coverage in 2015 to at least 70% of their full-time employees may be subject to the so-called “b” tax penalty if the coverage did not provide “minimum value” or was unaffordable. Firms that offered minimum value “lite” plans (i.e., no hospital or physician coverage) that met special “grandfather” rules will not be subject to the “b” tax even if an employee receives a subsidy.” These alerts, or notifications of possible fines, originate directly from the HHS and pertain to employees that were determined eligible for at least one month in 2016 thus far. Although no specifications were set regarding the period of the year the notices covered, ASA learned that they would potentially cover those enrolled in open enrollment ending Jan 31^st 2016.

With all of this information/notifications being delineated throughout the staffing industry one key issue is whether or not to appeal the notices. As some may know, but is not widely proclaimed or described to the public, the exchanges have no authority to make employer tax assessments. This power rests solely in the hands of the IRS and those staffing firms who chose not to appeal may still have the right to challenge any additional IRS assessments. The ASA reports that they may challenge “on the grounds that the employer offered affordable, minimum value coverage, or that it did not offer coverage because the employee had not completed an applicable waiting period”. First and foremost, the main reason for appealing is obviously to help reduce the employer‘s potential tax liability. One other is the fact that filing may eliminate reports from the Marketplace to the IRS if the exchange makes their determination in favor of the employer. Most importantly however, these notices rush to reiterate that they still will not effect whether companies will have to pay an employer responsibility payment to the IRS.

As companies continue to receive and react to all of this new information, understanding just exactly what employers are responsible for is crucial. Overall knowledge and basic upkeep of the new information will be key in tackling the on going changes that are on the horizon. One can only imagine how many more changes, rulings, adjustments are in store nationwide, for our market.

Chris Bresnahan is the Business Development Manager for The Lee Group, an Executive Search & Staffing Firm. He is instrumental in bringing top talent to new clients in all industries. To discuss how Chris can help your company Discover The Lee Group Difference, email him at chris.bresnahan@theleegroup.com.  Chris Bresnahan Linkedin