When the Affordable Care Act (ACA) was signed by President Obama on March 23, 2010 it was the most fundamental legislative transformation of the U.S. healthcare system in forty years. The law contained health insurance reforms that were introduced over the course of several years, with the bulk of the changes taking effect by 2016.
For the staffing industry, the ACA was a bomb dropped into business as usual. How could we possibly comply with the law given the specific niche we serve providing companies with short-term, often low-wage temporary workers? Eight years have passed since the ACA became law, and it seems like a good time to check-in on our staffing supplier partners to see how they have adapted to ACA and if the law has lived up to all the dread it originally generated.
Given what was at stake, the industry’s dread was well-founded. The ACA was not without teeth and included steep penalties that could potentially start at $40,000 and increase with the size of the firm’s workforce. To further complicate issues, not just any kind of insurance would satisfy the law. Policies had to provide a 60 percent coverage rate for healthcare expenses and insurance for less than 9.5 percent of a worker’s wages1. Given the high cost of non-compliance, the industry needed ACA solutions, and they needed them fast.
As we weighed our options as an industry, the choice to staffing agencies boiled down to two primary choices: 1) add temporary workers to their company’s existing “core” health insurance plan that covers their internal employees or 2) enroll temporary workers in a separate health insurance plan, administered by a third-party provider, and designed specifically to ensure ACA compliance.
So, how are staffing suppliers managing the ACA eight years after it was signed into law? In August 2018, AgileOne surveyed our suppliers to get insight into the impact the ACA has had on their workers, their business, and their bottom-line.
The results of the survey were both reassuring and surprising. The good news? Suppliers seem to have weathered the ACA storm with little to no business-killing effects. While 34 percent of our respondents reported that their businesses had absorbed the ACA with no significant problems, 39 percent had seen an increase in their health insurance costs, and another 27 percent considered the burden of managing the ACA, for the most part, “just another regulatory hoop to jump through.”
Suppliers that completed our survey had overwhelmingly avoided penalties, with less than four percent having been fined as a result of ACA compliance. Most of the suppliers we polled (82 percent) were not only providing their temporary workers with health insurance, but with additional benefits like dental, vision, and life as well.
What we did not anticipate is how divided the responses would be based on the choice suppliers made regarding the type of solution they chose to cover their temporary workers. Our survey showed that 65 percent of the staffing companies had elected to put their temporary workers on their own, in-house core health insurance policy. As a group, these suppliers were less satisfied with their ACA solution, with 70 percent of them citing additional cost and administrative burden as part of the ACA’s impact on their business.
This was in stark contrast to the companies we polled who had chosen a third-party agency to administer and manage ACA compliance for their temporary workers. Of that group, only 25 percent mentioned similar concerns with their third-party ACA solution.
The difference between the two groups goes a step further when you consider that implications that go beyond cost and administrative burden. Did you know that placing temporary workers on the company’s core health insurance plan can negatively impact on the quality and cost of that plan for the company’s regular employees? Even worse, it could have serious implications for the business and it's employees long after a temporary worker has left the building.
A company’s core health insurance is based on a number of factors including usage and participation. When a temporary worker is offered insurance – for some of whom it will be the first time they have had coverage in many years - the tendency is to immediately “play catch up” on all the services they were previously unable to utilize. For example, Ben has been out of work and was unable to keep up on his COBRA coverage. He takes a temporary position through your company and enrolls in the health insurance plan. Now covered, he schedules all of his annual services - - pumping up the metrics that determine the cost of your policy as a company. Shortly after, his temporary assignment ends and Ben goes off of your insurance. This is considered a “hit-n-run” in insurance-speak – costs being driven up by a bump in services consumed by short-term employees - and it can have a devastating effect on the price and features you are able to offer your employees.
This disparity in how companies are managing the ACA was an eye-opener and a clear sign that the implications of the ACA – eight years after it was signed into law - are far from over. It is important for staffing suppliers to be continually examining their solutions to ensure they are making the best decisions possible for their business. That includes partnering with companies like AgileOne that have the resources to provide practical solutions to your business needs, like the ACA. If you would like to know more about becoming an AgileOne supplier, please email the AgileOne Global Strategic Sourcing group at gssinquiries@agile1.com.
About AgileOne
From cutting-edge technologies to award-winning services, AgileOne has the resources to provide true total talent management. Good vendors can provide cost savings, risk mitigation, vendor management, and talent acquisition; but a great partner supports your business goals and navigates the legislation, regulations, and trends that will shape the future. Go beyond traditional workforce programs with a single consultative partner that understands where you want to go, and how you can get there. Minority/woman-owned, with operations in nearly 20 countries around the globe. One World. One Workforce. One provider: AgileOne.
1 Impacts of the Affordable Care Act Staff Management January 1, 2014 https://www.staffmanagement.com/impacts-of-the-affordable-care-act/