NCPA - National Center for Policy Analysis

Health Law Could Boost Use of Temp Workers

March 27, 2013

The Affordable Care Act (ACA) could prove to be a boon for temporary staffing companies as employers outsource jobs to sidestep complex requirements for medical insurance. But some experts say the Affordable Care Act's exceptions for temporary employees could undercut the goal of expanding coverage to more American workers, says the Washington Post.

  • Starting in January, employers with at least 50 workers must offer affordable coverage or pay a penalty.
  • To stay under this limit, some are considering outsourcing jobs to specialists such as Kelly Services, Manpower, Robert Half and Randstad.

The health law is also prompting larger organizations to use temp agencies. By requiring employer coverage only for those who put in at least 30 hours a week, the ACA appears to create an incentive for companies to do less with permanent workers and more with part-timers, which are the main focus of staffing agencies.

In regulations issued last year, the IRS left an opening for employers of "variable-hour" labor such as temp agencies. If it's not clear upon hiring that an employee will consistently work more than 30 hours weekly, companies get up to 12 months to determine whether the person is full time and qualifies for health benefits -- even if the employee does end up working full time. Few temps last 12 months.

  • Under the health law's mandate that everybody be insured, temp workers without insurance must pay a penalty or seek coverage in state-based marketplaces known as exchanges.
  • Because of the lower wages typically paid by staffing agencies, temps will probably be eligible for tax credits or Medicaid.

A few years ago, when Massachusetts implemented its own requirement that companies provide health coverage to full-time workers, temp jobs increased six times as fast as in the country as a whole.

Source: Jay Hancock, "Health Law Could Boost Use of Temp Workers," Washington Post, March 25, 2013.


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