This month marked a milestone in the history of health insurance in the United States, as the first phase of the Patient Protection and Affordable Care Act (PPACA) took effect. On October 1, the act’s application process began, giving individuals the opportunity to purchase coverage on their own if their employers fail to provide it or if they’re not satisfied with company plans.

The PPACA, also known as Obamacare, will affect businesses of all sizes and across all industries, with the greatest impact being on small and mid-sized companies. And for temporary staffing firms, it has the potential to be a financial windfall as employers adjust head count levels to comply with the new law.

How Obamacare Works
The PPACA requires companies with more than 50 full-time equivalent employees to offer affordable health insurance to their workers, or pay a penalty. Under the auspices of the new law, it would seem apparent that the nation’s largest employers, whose employment totals far exceed the PPACA limit and who tend to offer comprehensive benefits, will not be significantly affected.

Companies that employ 50 or more people and do not currently offer coverage have till 2015 to decide whether they’ll begin offering at least a minimal insurance plan or pay a tax of $2,000 per employee. This tax will be based on their 2014 head count, so companies anxious to slip under the 50-employee limit will need to act within the coming year. According to a number of benefits consulting experts, employer maneuvers to “get under 50” have already begun.

A Boom for Temporary Agencies
Companies on the bubble, whose want to stay under the 50-employee limit, are expected to turn to temporary workers to achieve that goal. As noted by SunTrust Robinson Humphrey analyst Tobey Summer, “In general, Obamacare is viewed as something that will lead to increases in the penetration rate of temporary workers.”

  • A recent study by Mercer indicated that 50 percent of companies not currently offering insurance said they plan to lower their head count to avoid exceeding the PPACA limit.
  • A report by the Wall Street Journal and CNBC also noted that an increasing number of companies will increase their use of contractors, so as not to be responsible for providing health care coverage.

In addition to providing staffing resources, the new system is an opportunity for firms to present themselves as industry experts in labor rules under Obamacare, as they advise their clients on how they can legally comply with the PPACA while keeping their FTE counts below 50.

Be strategically smart and get ahead of the game – and the competition – as you prepare for PPACA implementation. To learn more, contact the team at Alternative Staffing today.

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