We’re not used to thinking of temporary employment as something that comes with a tax. That’s for sodas and blue jeans! But the reality is that, depending on your semantics, you can argue that new rules under the Affordable Care Act will create taxation related to an employer’s options for providing health care to workers.

The Philosophy of the Affordable Care Act

Healthcare reform was intended to create more options for health care coverage in an economy where medical bankruptcies are a serious problem. One of the overarching goals of healthcare reform was to reform the employer-based coverage model, where it was difficult to buy individual insurance, and so workers always relied on their employers to give them coverage options in the form of benefits.

Today’s Reality

The ACA did several things. It gave people a marketplace to go to if they were unemployed or self-employed, or needed individual coverage. But it also creates a mandate for businesses to cover more of their employees through group policies.

Fact sheets from the U.S. Department of Health and Human Services show that under new ACA rules this year, employers will have a ‘play or pay’ option. They can choose to offer certain kinds of qualified healthcare coverage to a certain percentage of employees, or they will be subject to a monthly excise tax. Generally, the amount of the tax would be $167 per eligible employee under HHS calculations.

Since staffing companies are employers, the same responsibilities will apply to them. That means in certain conditions, there will be a “tax” on the temporary workers that staffing services provide to client companies. That’s important, because hiring temps has been a way for companies to get around health insurance costs entirely. Now, staffing companies and their clients will need to find ways to work the new mandate into contracts.

Conditions

Companies can avoid this problem by providing comprehensive benefits packages to employees. However, there are lots of mitigating factors that go into the calculations that businesses make about hiring. Many companies choose to utilize part-time employees, who the government does not require them to offer coverage to in the same way. They may also choose to utilize contractors. Or they may use temporary workers while staffing services internalize the new costs. The reality of the situation is that larger employer costs will be built into the model that drives healthcare reform.

Yes, there may be a “tax” in the model somewhere, but that doesn’t mean that everyone’s temp service contracts will go up by $167 a month. Staffing services work with their clients to offer equitable packages for facilitating growth and expansion. And many clients point to their relationships with staffing services as a crucial ingredient of their long term success!

For more on how staffing services work with client companies, check out our Full Steam Staffing blog. We detail the challenges that businesses face, and how to succeed in today’s highly competitive business world.