CWS 3.0: October 26, 2011 - Vol. 3.30

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News: Healthcare Reform: Penalties Could Increase Contingents’ Costs

Penalties under the federal healthcare reform could increase costs for staffing firms and raise prices for contingent workers starting in 2014. And those penalties came under discussion recently at the American Staffing Association’s Staffing World trade show that took place on Oct. 11-14 in New Orleans.

Healthcare reform penalties could cost as much as $2,000 per year — multiplied by all full-time employees — if a firm does not offer insurance and at least one worker qualifies for state-subsidized healthcare insurance. (Firms would need to have at least 50 full-time employees before penalties could kick in and the first 30 would be excluded from the calculation.)

Even if a firm does offer insurance, if one or more of its employees qualifies for a government subsidy to buy health insurance, the company would have to pay $3,000 per year for each such worker.

Edward Lenz, senior vice president, legal and public affairs at the ASA, said the association is pushing for a 12-month "look-back period" that would limit any possible penalties to only those workers who worked full-time during the complete look-back period. If a worker did not work full time for a 12-month look-back period, his or her employer would not be on the hook for possible penalties. However, if a contingent worker was full-time for the 12-month period, that worker would then be considered a full-time worker for the next 12 months regardless of hours worked as long as he or she was still employed and his or her employer at that time could be eligible for penalties.

The look-back period could reduce the number of workers eligible for penalties under healthcare reform.

However, Lenz said the chances of a 12-month look-back period appear low. The federal government is also weighing a shorter look-back period as low as three months, but three months would be the most pessimistic scenario.

Another limit on the number of workers firms could be penalized on are those who qualify for Medicaid. Those receiving Medicaid would not get subsidies that trigger penalties. In addition, discussion at the conference suggested some workers who are borderline qualifying for a healthcare insurance subsidy may go without applying for it given the complexities of working with the federal government.

Challenges to the healthcare reform legislation will likely be going to the U.S. Supreme Court, and there are elections next year. However, staffing firms were advised to plan ahead for the law. The Supreme Court is unlikely to strike down the entire Healthcare Reform law, and even if Republican wins in next year’s elections, it may not be enough to enable them to repeal the law.

A more detailed explanation of the healthcare reform penalties is available to members of the Contingent Workforce Strategies Council. Click here.

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