The somewhat surprise affirmation by the Supreme Court this past week for the Patient Protection and Affordable Care Act ("Obamacare") has levered up the game of “chicken” that many states are playing with the state sponsored exchanges and Medicaid changes. With the wheels of bureaucracy continuing to creep forward with full implementation, it serves the healthcare staffing industry to look forward to the impact on the temporary staffing geography.
Taking a purely macro economic viewpoint, there are a couple of areas that will directly impact the industry. The first area is the mandate for certain employers to provide health insurance coverage for employees, or pay a significant fine for each full time employee.
For a staffing firm with 50 full-time equivalent employees, a penalty kicks in for failure to provide coverage for employees who average 30 or more hours a week in a given month. The penalty is $2,000 for each full-time employee in excess of 30 full-time employees. There are no penalties if part-time employees aren't offered coverage. The variable in calculating the penalty is that it isn't based on full-time equivalents, but rather on actual full-time employees. That means being eligible for the penalty doesn’t automatically mean you will be penalized.
To clear the confusion, here is what that means. In calculating if you are large enough to be considered for the penalty, the number of full time equivalents is a combination of actual full time staff (over 30 hours per week) plus all additional hours worked by others divided by 30. In the staffing industry, there are usually a large number of employees that do not average 30 hours per week, but do add to the hours used to calculate full-time employee numbers.
The good news is that once your full time employee count has been established, using all hours paid, the penalty uses a much less harsh method for the employee count. Penalties begin for the 31st full time employee that are not covered, but the good news for smaller businesses, is that these penalties are based on ACTUAL FULL TIME EMPLOYEES, not the total part time hours divided by 30.
Smaller employers will have to take a close look at how many employees average at least 30 hours weekly, then add to that the rest of the hours for all other employees divided by 30. If this number is over 50, then the penalty is viable. However, the next bit of math will be how many employees are actually averaging over 30 hours per week. As long as this number is 30 or below, no penalty exists. If it is over 30, each additional person will create the $2,000 penalty.
It’s a bit of tricky math, but should only affect those firms that are right in the “sweet spot” of at least 50 full time equivalents.
