The Health Care Act: Three Key Things You Should Know

When the U.S. Supreme Court chose to uphold Obama’s health care law, more formally known as The Patient Protection and Affordable Care Act (PPACA), earlier this year, staffing and recruiting professionals knew that changes were on the horizon for their companies, and employees.

According to a poll by staffing company Adecco, 55 percent of U.S. senior executives named healthcare benefits as their biggest current business challenge, noting that they were more worried about providing healthcare benefits to their employees than they were about things like wages, taxes and attracting qualified workers. In fact, a third of those surveyed said they were holding back hiring because of the healthcare reforms introduced by Barack Obama.

Over a week has now passed since results of the 2012 Presidential Election were released and Forbes contributor Avik Roy said it is now time for companies to progress forward and recognize that the health care act is here to stay.

“Thirty-one and a half months after the Affordable Care Act was signed into law by President Obama, we finally have our answer,” Roy said. “The President’s re-election, and the Democrats’ gains in the Senate, mean that Obamacare is here to stay.”

Experts are projecting that Obamacare is likely to cost both employees, and employers, but figures and details are still largely unknown. This has made it hard for recruiters to plan for the future, Co-Founder of Essential StaffCARE Aaron Lesher writes, in an article titled “Impact of Health Reform on Staffing Companies”, shortly after the health care law was upheld by the U.S. Supreme Court.

“There is a vast knowledge gap on the realities facing staffing companies under this new law,” Lesher writes. “There is also a lot of misinformation being promulgated, which can be even more dangerous than no information.”

But there ARE some important things that we DO know. Here are three key things you should know as we progress towards the healthcare reform, which is expected to be fully enacted on Jan. 1, 2014, and what they could mean for your staffing and recruiting company:

1) Beginning in 2014, nearly ALL Americans will have access to affordable health insurance options. The Medicaid program will be expanded, meaning more low-income Americans will be eligible to enroll and new customer protections will be put in place. Millions of people who were previously uninsured will gain coverage.

Q: What does this mean for staffing and recruiting professionals?

A: An increase in job needs in the health care industry.

It’s estimated that 32 million Americans will be entering the health care system by the time the reform takes full effect, meaning the need for staff within the healthcare system will greatly increase in the coming years.

According to an article on EmaxHealth’s website, following the release of the Affordable Care Act details in 2012, the Association of American Medical Colleges forecasted a shortfall of 46,000 primary care physicians by 2025, and an increase in doctors’ visits to primary care physicians from 462 million in 2008 to 565 million in 2025, using research that factored in population growth and aging.

 This health care act decision increases the need to train more doctors, and the nation’s physician shortage is projected to climb to more than 90,000 by the year 2020.

2) Beginning in 2014, the act will require employers with more than 50 employees to provide health care coverage to their full-time workers. With this new health care act, the definition of a full-time worker is now five times lower than the definition provided by the U.S. Bureau of Labor Statistics, previously defined as “persons who work 35 hours per week” and now defined as “any employee that works an average of 30 or more hours a week for a one-month period”.

Q: What does this mean for staffing and recruiting professionals?

A: An increase in costs per employee = adjustments to employee counts.

Companies who do not offer a health care plan for their employees will be required to pay a tax for each employee, estimated to be at around $2,000. Under this new health care act, each employer will have to decide on what will work best for their company, whether it would be providing approved health care coverage to all “full-time” employees, or cutting their health care program and paying the penalty fees. Most staffing companies will fall into the “large employers” category (50 or more employees), and data suggests that large companies, and companies that employ large numbers of temporary or seasonal employees, will be the most financially impacted.

According to an article published by The Wall Street Journal, experts predict that many lower-wage employers will move toward hiring part-time workers to cover the work that they would, in other circumstances, give to full time employees. The average number of hours worked per temporary worker will likely decline to well below 30 hours, while the number of temporary workers will likely increase to match the necessary amount of labor needed to complete a company’s workload.

3) A new health care reform guidance was recently put in place to aid employers. Earlier this year, at the end of August, the federal government put forth guidance under the health care act that could greatly reduce the employer penalties that are set to take effect in the year 2014, termed the “look-back period”. According to the Staffing Industry Analysts, the guidance would allow employers to use a measurement period of up to 12 months to determine if an employee is full time; only workers who are still working full-time after 12 months would count when figuring employer penalties under the health care act. Employers are allowed to rely on this guidance until at least the end of 2014.

Q: What does this mean for staffing and recruiting professionals?

A: A potential break from some health care act penalties.

Because this look-back period would reduce the number of employees that would be considered full-time, it could, in effect, also reduce costs for staffing firms by limiting the number of employees that an employer would be penalized for.

However, according to the Staffing Industry Analysts, a look-back period would require a stability period following, in which any worker that was found to be a full-time worker during the look-back period would remain full-time, whether or not he or she still works full-time hours, for at least six months following the end of that person’s look back period. So if your staffing firm keeps a worker for longer than a year, then you may have to provide qualifying healthcare coverage.

So what’s next on the horizon?

Bottom line, the most important thing you can do as a staffing and recruiting professional during this time period is look at the facts and be prepared. Devote time to this studying this act, and use this research to determine what will work best for your company or organization.

Here are a few good articles to reference for more, general information on the health care act:

Key Features of the Affordable Care Act, by Year

*The Adecco poll was conducted in early October and included responses from 501 CEOs, owners, managing directors and other senior executives.