How is the Affordable Healthcare Act Impacting Business Employment Practices?
Staffing Stream
How is the Affordable Healthcare Act Impacting Business Employment Practices?
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The Affordable Care Act and its website, healthcare.gov, have been the topic of numerous conversations, articles, letters to the editor, editorials, cartoons, late night talk show host jokes and Internet headlines. It’s pretty obvious to businesses and those needing insurance that this is no joke. Even government and private business experts are confused and wondering what’s really in store for us.
While signing up for coverage and finding an affordable plan is a huge concern for millions of uninsured Americans, another concern is how businesses will interpret and respond to the ACA’s employer mandate (or employer responsibility provision) stating all employers with 50 or more full-time employees must provide affordable insurance to employees by the time the mandate takes effect on Jan. 1, 2015, or face stiff financial penalties of $2,000 or more per employee.
When it was first revealed, the reaction to this mandate from the business community was pretty clear. Few businesses felt ready to implement such a plan by Jan. 1, 2014 - the original roll-out date - nor were they ready to produce and manage the paperwork that the mandate would require.
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As a result, the employer mandate was pushed back a full year, giving businesses a chance to plan and come up with a strategy.
Some firms have jumped the gun and have recently reduced employee hours in the hopes of avoiding a penalty, even though they have a year to figure out how they will handle this issue. Add into the mix a general anxiety over how many hours a week makes an employee full-time or part-time. Some employers consider anyone working over 30 hours to be a full-time employee while others consider 32 hours or more a full-time schedule. Since it varies, employers are concerned, and with good reason. The penalties will be substantial.
So what is happening right now? Clothing retailer Forever 21 recently said it would reduce part-time worker hours from 30-32 hours a week to 28 or 29, just to be safe. Others have done the same, and more will probably follow suit. How this will affect businesses and employees in the U.S. is a hotly debated subject.
Additionally, numerous employers are considering alternatives to the traditional health insurance plans that we are used to seeing before the ACA. Terms such as “skinny plans”, “fixed indemnity plans”, and “wrap around” plans are becoming more and more common as employers and insurance companies begin creating compliant solutions to the industries that are impacted the greatest.
One thing is for sure: temporary employment has been increasing and shows no signs of slowing down. There is likely a combination of factors going on and businesses, including temporary staffing firms, will have to study and prepare for a new economy and employment landscape. Some research indicates the ACA mandate will in fact increase the paperwork businesses have to submit to the government for full-time direct hires. A recent study by IQ Navigator suggests companies will have to decide whether to provide coverage for low-wage, full-time workers or scale back the workforce and fill the gaps with temporary workers.
We’ve seen regular employment numbers improve recently, but temporary employment has seen tremendous improvement since 2009. In fact, the U. S. Labor Department said earlier this year there were more temporary workers now than ever before. Businesses are being more cautious about hiring choices, and taking longer to fill positions that were vacated. The economic downturn also caused many businesses to rethink their business plans and hold off hiring full-time employees in favor of utilizing temporary staffing firms to fill their employee gaps.
According to Staffing Industry Analysts, temporary staffing was up by 16 percent in November 2013, and showed an increase of 8.6 percent from the same time the previous year. In addition, SIA reported that temporary employee staffing reached a 2.03 percent penetration level, matching an all-time high percentage.
Whatever companies decide to do about the employer mandate, hiring and growing their business in the midst of constantly changing business conditions will be up to them. We can all agree that 2014 will be a transitional year where businesses will be looking for alternatives and answers to the ACA mandate. By the end of the year, we’ll have had a year to research and read the studies and reports in order to make better decisions.
But in the interim, temporary workers are filling a need and showing promise as an economical and practical way to augment a business’ workforce without additional paperwork and potential fines.