Employee health insurance coverage is in the news these days, so the Global Human Resources Outsourcing (GHRO) team thought we’d take a look the situation regarding coverage for an increasingly important part of the U.S. workforce – contingent workers.

Contingent workers – such as temporary employees, project consultants, contractors, seasonal workers, freelancers, and other non-core employees – now represent 30 percent of the entire U.S. labor force, according to the Advisory Council of the U.S. Department of Labor. The number of contingent workers employed in the U.S. is predicted to quadruple over the next 10 years.
Hiring employees on a contingent basis is emerging as an increasingly commonplace practice for today’s cost-conscious companies striving to improve workplace productivity and profitability, while minimizing costs and overhead. Particularly in light of the significant budget cuts and layoffs that have taken place over the past few years, contingent employment has become an integral part of the overall business strategy of many companies..

Unfortunately, the majority of companies today don’t provide competitive benefits programs to their contingent employees. The Department of Labor Advisory Council reports that less than 18 percent of part-time workers have employer-provided health or retirement benefits, fewer than eight percent of temporary workers have such benefits, and no independent contractors receive these benefits.

This is largely due to the rising costs of medical and other insurances, coupled with the high costs, overhead, and risks of administering benefits for non-core employees. The time, costs and risks involved with managing benefits for non-core workers is much greater than for permanent employees because of the temporary nature of these types of employment arrangements.

Benefits Outsourcing

One solution to the dilemma is benefits outsourcing.

Outsourcing the HR and benefits administrative processes to a specialist is enabling more companies today to offer a competitive benefits package to their contingent staff and, as a result, better capitalize on their contingent staff resources.

A payroll and HR administrative service provider acts as the client company’s employer of record for their contingent workforce.

Among all the services that a payroll, benefits and HR administrative specialist should offer, benefits administration can be critically important.  It involves management of medical, dental, vision, disability, and life insurance, COBRA, 401K, and other employee benefits plans.

Look for a specialist that:

1. Has a solid industry track record.
2. Offers a comprehensive, diverse level of HR and benefits administrative services.
3. Provides tailored HR and benefits administrative service packages, so that the company pays only for the services needed.

This type of service provider will be much more likely to accommodate your company’s specific HR and benefits administrative needs.

You need it, but so do your contingent workers – an increasingly important part of your staff.

Higher health insurance costs, new 1099 regulations, and now increased payroll taxes?

That’s the latest expectation from President Obama’s proposed budget, set for unveiling next week.  The big news for small businesses: the budget is expected to replenish states’ dwindling unemployment funds by increasing payroll taxes.  This will happen by raising the amount of unemployment-taxable wages to $15,000—more than double the $7,000 which has held steady since 1983.  This plan, which would take effect with other new tax laws in 2014, stands to increase payroll taxes by over $100 billion over the next decade.

But is this plan merely borrowing from Peter to pay Paul, at a time when the Obama administration is trying to improve relations with business groups?  Keep in mind, unemployment insurance is a joint federal-state program.  State governments must pay the first 26 weeks of unemployment benefits and have had to borrow heavily from the feds to meet this requirement.  To bridge last year’s gap, more than 40 states had to increase their unemployment-insurance payroll taxes.  What will happen to the tax rates under the new plan is up to the individual states and is anyone’s guess.  One thing is for certain—it appears rebuilding the unemployment fund will fall squarely on the backs of businesses.

Legislation was introduced last week that could extend certain unemployment benefits and expiring tax provisions through the end of the year. The legislation is being called the American Jobs and Closing Loopholes Act of 2010.
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According to the Senate Committee on Finance, the legislation would:

* Provide tax relief to organizations to encourage the growth and creation of jobs
* Provide tax cuts
* Create small business loan programs
* Expand career training programs for jobseekers
* Extend eligibility for unemployment insurance benefits, COBRA health care tax credits, and other programs through December 31, 2010
* Ensure that seniors, military service members, and people with disabilities continue to have access to medical professionals
* Close tax loopholes for investment fund managers and foreign operations of multinational companies

In addition, the legislation could make several changes to disaster response in the areas of:

* Oil spill response
* National Flood insurance
* Main safety
* Federally-declared disaster areas
* Agriculture disaster relief