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The Effects of the Patient Protection and Affordable Care Act PPACA on the Staffing Industry

Multilayered political issues are not uncommon to the staffing industry. In fact immigration, unemployment, job creation, and health benefits for temporary workers are all hurdles we in the staffing industry have encountered for years. Now that the 2012 Presidential election is over most of the USA can all take a deep breath. Health care has been an ongoing topic of discussion to the majority of Americans for some time now leading into the election. Now that the election is over we are all left wondering when the Patient Protection and Affordable Care Act will take effect. The PPACA will affect all U.S. employers; the greatest impression is going to be left on the staffing industry. While beneficial, the act will create the prospect for non-traditional workers to access affordable healthcare for the first time. Inversely, the unique characteristics of covering the cost, important guideline questions, regulation, and complementary industry products that will arise to supplement the temporary workforce with sporadic assignments and highly flexible work schedules will make the act’s implementation a daunting task for staffing firms of all sizes.

The new law clearly states that companies with over 50 full-time employees will have to provide health benefits to all of its employees or pay penalties. What keeps me up at night is when this law takes effect what will happen to MS-IL Staffing. MS-IL sends out over a thousand workers weekly. Currently, those workers are offered health coverage after a 90 day waiting period, but the insurance premium is paid by the worker. In a quick calculation of the cost for my employer to provide the government mandated health insurance to its 1,000 plus temporary workers annually would exceed $3 million.

MS-IL Staffing is just one of hundreds possibly thousands of staffing companies facing the same dilemma the roughly $.80/hour increase per worker based on a 40 hour work week. One answer is simple: transfer all or a significant portion of this cost to the client. A staffing company who just sends out 50-200 people weekly working 40 hours/week is considered to be a large employer by the PPACA, however it couldn’t be further from the truth. It’s fair to say that the majority of every staffing company not sending out a minimum of 1,000 people weekly will immediately go out of business once the law is in effect. How will the industry change as a result? The first visible result will be an enormous reduction in the number of staffing companies.

Where do we buy the insurance? Like most staffing companies that currently offer insurance to their temporary workers MS-IL offers a portable, mini-med program that provides inexpensive, portable, basic coverage. These medical programs do not meet the requirements of the PPACA. The temporary employee market has not ever been attractive enough for the insurance companies to offer insurance. Workers often leave temporary employment, or become the full time employee of the client after only a short period of time. Medical insurance packages offered to temporary employees that meet the required federal coverage levels simply don’t exist, because the temporary staffing workforce is constantly changing.

There is the question of state-run health care exchanges, but the states have not yielded an answer as to whether or not they will provide an exchange. Obviously, this is a question only to be answered by the states themselves. Equally, we must ask ourselves what is going to happen, if a state decides not to participate.

The most glaring procedural question is: When does full-time employment start according to the PPACA? The answer is that we don’t even have an idea when we will find out. From the perspective of a staffing company the ramifications of this question are enormous. For instance if the look-back period is longer, then the less expensive the cost will be for a staffing firm to offer health care. In the same respect the penalties will be fewer as well. If the look back period is shorter it is going to be far more expensive to offer health insurance. Also, the number of penalties will be far more expensive to the employer as well.The exposures to the staffing industry by the PPACA might leave you wondering if the industry will continue. The answer is that staffing will continue to exist, but the face of the industry will be changed forever. The decisions made to reduce the cost and fulfill guideline requirements will forever change the industry as we know it today. Ultimately our conscientious pronouncements will change manufacturing, logistics, insurance, and every blue collar job in America very soon!

 
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