Earlier this month, representatives of the Staffing Industry urged Congress to repeal the Patient Protection and Affordable Health Care Act (“ObamaCare”) that was signed into law in March of last year. Under ObamaCare, employers with 50 or more full-time workers are required to offer a minimum mandated coverage or pay a penalty of $2,000 per employee per year. “Full time” workers are those who provide at least 30 hours of service per week, with respect to any month.
Many staffing firms have two separate groups of “full time” employees, internal permanent workers and “project based” employees who perform the consulting / freelance services to end clients. Often, staffing firms offer two separate health care plans to these distinct “full time” employee groups. One plan being a “traditional” plan offered / taken by internal permanent workers and a second plan being a “basic” plan offered / taken by “project based” employees. These “basic” plans will almost certainly not qualify as “Obama blessed” plans meeting ObamaCare’s mandates.
What does this mean to staffing companies? If ObamaCare is not repealed, staffing companies will have to amend or scrap their basic plans offered to “project based” employees and replace them with “Obama blessed” plans. The Congressional Budget Office (“CBO”) estimates that the “Obama blessed” plans will be more expensive than most “traditional” plans currently offered. If such estimate is true, just imagine how expensive it will be to bring the “basic” plans currently offered to consultants / freelancers up to the “Obama blessed” standards. Making this situation worse, is ObamaCare’s requirement that employers pay a $3,000 fine for every employee whose out-of-pocket cost of health insurance exceeds 9.5 percent of their income.
This increase in plan expenditures, when coupled with the potential fines, throws a big monkey wrench in many staffing companies’ business model. Project based employees who were formerly price attractive to both staffing companies and end clients may be priced out of the market. John Uprichard, President of Find Great People Intl., hit the nail on the head when he testified that the “Healthcare reform will force us to change the strategic direction of our company and eliminate [the company’s business] because the risk does not justify the return.”
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and any law firm or attorney. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.