Posted in Cleveland Crain’s Business- November 7, 2013
There are many changes ahead in health care with the implementation of the Affordable Care Act. And there’s a real scramble going on to understand the law and figure out how it can best work for companies and individuals.
While almost everyone will experience some change, I believe three industries will be affected the most: staffing, retail and restaurants. That’s because they employ many low-wage workers and, until now, weren’t required to provide health care to these workers.
So the dilemma under the new law is: How will we pay for the new costs of health care in these fields?
I can speak to my business as a staffing firm. Under the new law, when we hire employees for our clients, they actually are on our payroll and now under the new law we are responsible for their healthcare costs.
Part time employees will be designated as variable-hour employees under the Affordable Care Act. This covers a huge portion of employees in the staffing/retail/restaurant industries, and calculating whether they qualify for health care coverage in the new Act is somewhat complicated.
For the staffing industry, the law allows us to use a 12-month, look-back period to determine whether these employees qualify for health care coverage. This look-back period enables us to determine an average amount of hours worked, which balances out the spikes in hours during certain periods. Such spikes are common with temporary employees hired by staffing firms.
This special designation gives us some flexibility in how we pay for health care costs — and can give companies we work with flexibility, too.
Overall, though, this will create more costs for my industry and it would be unsustainable for us to absorb them alone.
One solution we’re exploring is to share these costs with companies that use our temporary employees whether they fall under the temporary-to-hire scenario or the variable hour employee.
If this approach is accepted by the business community, the actual cost-per-hour for health care coverage would be less expensive through a staffing firm than if the company hired directly and permanently.
By chipping in for healthcare costs, it should save everyone money, with a lower cost of healthcare for all businesses.
So, starting in January, 2014, staffing firms have to start accounting for all of the temp employees they hire for clients and determine if and how they qualify for health benefits. We won’t start including those health care costs in our staffing costs until January 2015. This isn’t just a decision from our company; the entire staffing industry will begin to include health care costs as a part of the service we all provide to customers.
There’s been extraordinary controversy over the Affordable Care Act, also known as Obamacare, but it’s here and if we’re going to move forward, we have to find ways to make it work for everyone.
The good news for the staffing industry — and the companies who use temporary employees — is that I believe this can lead to a higher-retention rate for temp employees.
That’s because one of the biggest complaints we’ve gotten from our temporary employees is that they don’t get health benefits. Imagine a workforce where they have those benefits. We’ll be able to offer our customers a work force with greater stability and a more motivated group of employees, even among the temp work force population.
More stability, I believe, can lead to greater productivity for both the employee and the company. And that’s a good thing.
By: Aaron Grossman, CEO of Alliance Solutions Group
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