When significant provisions of the Affordable Care Act (ACA) go into effect in January 2014, it’s possible that new medical costs will change pricing structures for suppliers and clients alike. If your company partners with staffing vendors, you need to start thinking (now, if you haven’t already) about how the new provisions will affect your staffing/talent suppliers, contracts, pricing, and candidate availability.
Additional Overhead for Staffing Firms
Historically, staffing firms haven’t been required to provide health insurance to their employees. In fact, many suppliers operate under fixed markup contracts with their clients, which have encouraged a lot of staffing providers to offer as few discretionary benefits as possible to their resources. Even for employers like Celerity that have always provided health insurance and will continue to do so, it is undeniable that the ACA will add another cost layer that did not exist before.
Under the new law, all firms with more than 50 full-time employees will be considered “large employers,” and are likely to be hit with additional costs in the form of administrative burdens, fees, penalties (if they opt not to provide health insurance), or premium increases from their insurance carriers.
Changes in the Market
Significant changes in the talent pool itself may be an unintended consequence of the new ACA laws. It is estimated that approximately 27 million more people will have health insurance under the reform. The decisions staffing suppliers make about how and whether to offer insurance may be the impetus for existing talent on assignment to reconsider their relationship with their current employer.
Because insurance will become more accessible outside of the traditional employer/employee relationship, employees will no longer be as reliant on employers for health insurance. This could result in an increase in new resources looking to engage with staffing suppliers as independent contractors. If your current vendor contract prohibits the assignment of subcontracted resources, you may want to reconsider allowing independent contractors to provide services through your staffing vendors.
A few steps Celerity has taken to prepare for the impact of healthcare reform:
- Three months into the plan year, we've already started evaluating our health care plan design options for 2014.
- We've begun developing comparative cost models for likely health insurance alternatives.
- We've identified employee populations that have chosen not to take health insurance from Celerity, and determined reliable paths to insurance coverage for those employees.
- We've been reviewing recruiting and qualification processes for independent contractors.
As we all know, there is still a lot of uncertainty about what will happen with healthcare in 2014 and beyond. Despite all the ambiguities, one thing is certain: costs will increase for staffing suppliers and change is coming. Are YOU prepared?