The Affordable Care Act (ACA) went into effect in 2010, and since then staffing firms have navigated a number of shifts in the way they and their clients approach employee management. Now, things may get even more complicated as the new administration, headed by President Trump and the Republican Party, push for healthcare reform.
On March 6, 2017, House Republicans produced legislation—dubbed the American Health Care Act (AHCA)—designed to repeal and replace the ACA. Its path to approval was complicated, and it was ultimately abandoned. For a new healthcare bill to be enacted, it would need to be passed by the House of Representatives and the Senate, and then the president would need to sign the bill before any changes to the current regulation become law. Healthcare legislation is hotly debated by government leaders, and there’s very little certainty as to what will happen with it in the future.
What we know for sure is that staffing firms will be affected by any changes to current health care legislation. We may not have all the details, but it’s important to pay attention to the legislative process so companies can remain informed about the ways in which they will need to adapt moving forward. Here’s what to expect from efforts to repeal and/or replace the Affordable Care Act.
Repeal or replacement of the ACA will likely result in the elimination of the employer coverage mandate, which currently requires companies with 50 or more employees to provide a certain standard of health insurance to full-time employees or pay penalties.
Were this mandate to be revoked, employers of all types may have fewer incentives to provide employees with health insurance. For starters, employers would no longer face penalties for not providing insurance options. Additionally, repealing the ACA might mean more employees become eligible for tax credits that could make individual coverage more affordable. So employers might forego group coverage on the assumption that employees could seek insurance elsewhere. This could have major repercussions for the more than 150 million Americans who are currently covered by employer-based insurance plans.
Eliminating the employer mandate would have consequences for staffing firms and their clients. Leaders of staffing firms that currently fall under the employer mandate might find themselves debating whether and how to continue providing insurance options to their employees—and they will find their clients grappling with the same questions. This provides an opportunity for staffing firms to develop expertise and provide consulting to clients who may be confused by legislative changes.
Under the current version of the ACA, companies that fall under the employer mandate are required to offer health insurance to employees working 30 or more hours per week or pay a penalty. As a result, many employers have required some or all of their employees to work 29 or fewer hours a week.
Since this requirement is likely to be eliminated, it will mean employers may task staffing agencies with finding temporary employees who can take on more working hours each week. It will also mean staffing agencies may find it easier to do so. Over the past few years, employees who gained employment through a staffing agency have been considered employees of said staffing agency. That means staffing agencies have needed to adhere to the same requirements as other companies. If that stipulation goes by the wayside, staffing firms and their clients may be more willing to provide temporary workers with additional working hours each week.
When the ACA became law, many companies realized they could utilize staffing agencies as an alternative to providing full-time employment and facing the employer mandate. Indeed, many outlets noticed an uptick in part-time employment after the ACA went into effect (although it should be noted this was a case of correlation, not necessarily causation).
Whatever the exact cause, the penetration rate of temporary workers has been rising for the past several years. This has resulted in a boon for staffing firms, especially those specializing in small- and medium-sized companies—possibly because those companies are the ones with an opportunity to avoid the employer mandate. If the ACA is repealed and employers no longer feel the squeeze of the employer mandate, they may be more willing to hire their own permanent workforce. This could potentially decrease staffing firms’ market penetration.
Still, this might be mitigated by the fact that more individual workers may seek the support of staffing companies if the ACA is repealed. Some experts believe workers will be more likely to change jobs or seek out new employment in light of a repeal. And because Americans will likely pay more for health care (on average) under the new law, it’s possible people will seek out secondary employment to cope with these costs. A larger temporary workforce could be either a strain or a boon for staffing firms.
While consumers may experience major changes to their health insurance status as early as 2018, it will probably take longer for businesses to adjust. Various reporting requirements—such as including the value of health insurance on employees’ W-2s—will likely remain in effect, and companies will still need to report to the IRS about the insurance options they provide to their employees. Meanwhile, companies will also need time to accommodate new regulations.
Large staffing firms that already handle benefits and regulation compliance will no doubt have an easier time adjusting to these changes than smaller firms, which may need to add resources to manage regulatory changes. Still, no staffing firm will be immune from these legislative shifts. While we don’t yet know all the details of the new health insurance laws, remaining aware of potential changes can help staffing firms prepare for whatever lies ahead.