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

Market researchers with IBISWorld says they’ve looked into the costs faced by staffing companies should the law remain unchanged, and found that these agencies may be preparing to boost their fees to 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 either start offering “affordable” health coverage to “fulltime” employees, or pay a penalty of $2,000 per employee. And that cost will surely be passed along to the client, IBISWorld predicts.

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

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

“According to the mandate, staffing agencies that employ more than 100 workers must provide ACA-compliant health insurance to their eligible employees,” IBISWorld said in a report. “Any temporary workers that have been on assignment through a staffing agency for more than 1,560 hours during 2014 are qualified to receive healthcare coverage. If staffing agencies choose not to offer healthcare coverage to their eligible employees, they will be subject to a $2,000 penalty fee per eligible employee. Rising compliance costs are expected to place pressure on staffing agencies to raise their prices to protect their bottom lines.”

And by how much?

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

“To limit potential risks associated with rising ACA compliance costs, buyers of staffing services should carefully evaluate their staffing agreements to determine if they could end up paying for a portion 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 favorable prices and avoid paying more for additional service needs further on down the road.”

Instant Insights /

Staffing firms likely to pass along PPACA costs to clients

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