Much of the world — at least that part that intersects with thePatient Protection and Affordable Care Act — is holding its breathas the U.S. Supreme Court mulls a decision in King v. Burwell. But businesses that deploythe services of staffing agencies had best be coming up with a wayto deal with potential spikes in cost today to ensure a moreorderly tomorrow, should the court once again rule in favor of thelaw.

|

Market researchers with IBISWorld says they’ve looked into thecosts faced by staffing companies should the law remain unchanged,and found that these agencies may be preparing to boost their feesto clients in order to offset costs incurred by compliance,or lack of it, with PPACA.

|

That's because companies of a certain size will have to eitherstart offering “affordable” health coverage to “fulltime”employees, or pay a penalty of $2,000 per employee. And that costwill surely be passed along to the client, IBISWorld predicts.

|

Now, if the court rules in favor of King, this increase isn’tgoing to affect staffing firms in the 34 states that look to thefederal government to pay for the health insurance subsidiescurrently being received by millions. (At least not right away,although many anticipate that those states will be pressured topick up the subsidies.)

|

But even with an adverse-PPACA ruling, staffing firms in theother 16 states will face the play-or-pay decision, which willtrigger the pass-along decision.

|

“According to the mandate, staffing agencies that employ morethan 100 workers must provide ACA-compliant health insurance totheir eligible employees,” IBISWorld said in a report. “Anytemporary workers that have been on assignment through a staffingagency for more than 1,560 hours during 2014 are qualified toreceive healthcare coverage. If staffing agencies choose not tooffer healthcare coverage to their eligible employees, they will besubject to a $2,000 penalty fee per eligible employee. Risingcompliance costs are expected to place pressure on staffingagencies to raise their prices to protect their bottom lines.”

|

And by how much?

|

“Prices for temporary clerical and administrative staffingservices will grow at an average annual rate of 2 percent duringthe three years to 2018. Similarly, higher benefit and labor costsare expected to drive up prices for temporary warehouse staffingand temporary IT staffing services at average rates of 3.4 percentand 1.5 percent per year, respectively, in the next three years,”IBISWorld tells us.

|

“To limit potential risks associated with rising ACA compliancecosts, buyers of staffing services should carefully evaluate theirstaffing agreements to determine if they could end up paying for aportion of their supplier's rising costs,” advises IBISWorld.“Moreover, buyers, particularly those with large-scale needs,should consider signing longer-term contracts to lock in favorableprices and avoid paying more for additional service needs furtheron down the road.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.