ACA Lives to See Another Day: What that Means for Staffing

134091078With the American Health Care Act (AHCA) bill being pulled before it even hit the congressional floor for a vote, it seems as though the Affordable Care Act (ACA) is here to stay for a while. What does this mean for the staffing industry? Opportunity!

Now that companies can rest assured that their employee health care coverage requirements will not change in the near future, leaders can finally take a long-term assessment of their workforce strategy and the corresponding benefits of working with a staffing firm. In fact, ACA provisions offer guidance on ways that companies can work with staffing firms.

Under ACA requirements, applicable large employers with 50 or more full-time or equivalent employees must provide health insurance to at least 95% of their full-time employees and dependents up to age 26. If a company is found to not comply, they will owe a penalty per applicable employee that is not covered. If these requirements are not achievable, the preamble to the ACA’s final regulations on the employer shared responsibility requirements spells out a workaround.

According to the provision, companies who work with staffing agencies that offer their permanent and temporary employees the qualifying minimum essential coverage (sometimes called “qualifying health coverage”) are able to claim ACA compliance to meet regulations.

With this understanding, let’s review the pros and cons of staffing agency hiring within our current regulatory environment:

Pros

  • Under the ACA, staffing agencies can help employers maintain compliance, improve loyalty and reduce attrition costs.
  • From the employee’s standpoint, losing employment and healthcare coverage is a major determining factor when deciding whether to leave a company.
  • The temporary and permanent workforce is incentivized to refrain from job-hopping, thereby reducing one of employers’ most costly burdens – turnover.

PREMIUM CONTENT: Staffing firm use of self-insurance vs. conventional healthcare insurance

Cons

  • Staffing agencies that had previously not provided health care coverage to their associates may need to pass along that added cost to their clients.
  • Companies with staffing agency partners should confirm that those agencies are baking in coverage expenses in the most cost-effective manner.
  • Due diligence should also be performed by companies to confirm the coverage offered by their staffing agency partners is in line with ACA minimum requirements.

Final considerations

With increasing healthcare premium costs, employer-based healthcare coverage is becoming more and more important to today’s aging workforce. It is estimated that premium costs grew by more than 16% in some states. While coverage is an expensive investment for many small to medium-sized companies, the competitive advantage is worth it. The nation’s improving economy and increasingly competitive hiring environment are driving employers to enhance their benefits packages. Yes, this may be expensive in the short-term; however, the cost savings from employee loyalty and retention will far outweigh initial hiring fees.

MORE: Trump’s First Executive Order Takes Aim at ACA

David Dourgarian

David Dourgarian
David Dourgarian is CEO of TempWorks Software, a provider of staffing software and payroll funding.

David Dourgarian
David Dourgarian is CEO of TempWorks Software, a provider of staffing software and payroll funding.

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