How Staffing Agencies Can Overcome Insurance Challenges
Dan Levenson April 04, 2017
Finding and choosing the right insurance coverage can be tricky for most smaller businesses, but staffing and employment agencies face some unique challenges that other businesses their size do not have to deal with daily.
Traditionally, the workforce of this type of business is fluid and often lacks a good amount of supervisory control. In addition, many employment agencies assume liability for the actions of the off-site employees placed at a business.
Although coverage challenges for staffing companies are inevitable, there are practical steps that can be put into place to lessen the day-to-day impact. Here are some practical steps that employment agency businesses and staffing firms can employ immediately.
Being thorough at this stage of the game may seem costly up front, but can save you a good deal of money and frustration in the long run. Despite the cost associated with background checks, this important step should not be skipped. Your staffing agency could be held liable if it is determined that the candidate presented information that was not true during the hiring process and you failed to perform a background check.
A good screening process will help verify the candidate’s identity, past employment, provide education verification, any professional license verification, motor vehicle reports, and drug testing.
Client Risk Assessment
Along with making sure that employees you send to clients are who they say they are, it’s equally important to carefully evaluate potential clients and the risk associated with their business.
Be sure to have a clear understanding of their business operations and specific job roles within the company. Review if they have proper safety precautions in place, obtain OSHA reports if applicable, and look at loss runs from at least the last three years.
Try to resist the temptation to build your client list as quickly as possible. Instead, be diligent to bring in the right clients. Quality over quantity should be the mantra here.
Even if the day-to-day employee supervision is handled by the employer, be sure to keep the communication lines open and nip small issues in the bud quickly before they can snowball into large issues.
Sick or Injured Employees
Have a plan to get sick and injured employees back to work as soon as possible. Follow up with employees often if they are out sick or injured on the job and unable to perform their current job tasks. If possible, relocate them to a different company that can accommodate any restrictions they may have.
Health Insurance Challenges
Agencies that are heavy on temporary and contract-type services have a bigger challenge in regards to health insurance requirements today due to high turnover rates, limited time on assignments, and lower pay rates.
The biggest challenges typically stem from the employer-related responsibility rules that are different than other industries. In addition, if the agency can’t or won’t conform to the health care requirements today, they may face a fairly steep penalty. However, in some cases, employers may be able to include Medicare and Medicaid, or coverage under an employer-sponsored plan that can help meet eligibility requirements for these businesses.
New enrollment and waiting period requirements are a challenge to many employers today due to rapid turnover in some categories. Automatic enrollment is another major change with great impact since each employer is expected to automatically enroll full-time employees into an employer health plan.
The challenges seem inevitable, but how these agencies handle these challenges is what will help make or break their success. Understanding the requirements upfront can help alleviate some of the day to day headaches that surround group insurance requirements.