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There are a lot of costs that go into hiring and retaining employees, and those costs are expected to go up, specifically the costs of health insurance and taxes.

While debate to repeal and replace Obamacare rages on, employer costs for providing health insurance to their employees are projected to go up. Furthermore, wages are increasing and for employers, that also means higher taxes.

Of course, employers can skirt these cost increase by hiring less full-time workers and meeting their staffing needs through a contract worker solution.


Reason #1: Healthcare costs to increase

Employer-sponsored health insurance has little or nothing to do with Obamacare and the instability of the public exchanges.

The health insurance full-time workers have through their employers is more secure than that available through the public exchanges, with less rate unpredictability and health plan interruption. However, the problems of our health care delivery system and rising health care costs are still a worry for all employers.

Those who get their health insurance through the exchanges are projected to see double-digit percentage rate hikes next year, while those covered through large employers will see single-digit increases, according to a recent survey of large employers by the National Business Group on Health.

The survey found rate increases of around 5 percent, the same amount of increase as the last five years. For employers, this also means higher healthcare costs from an average of $13,482 per employee in 2017 to $14,156 in next year. Most employers cover about 70 percent of worker healthcare plans.

One factor driving up costs for all healthcare plans is the high costs of new specialty prescriptions. Many of these cutting-edge, specialty drugs come at a price tag of hundreds of dollars a dose or more.

Reason #2: Associated costs going up

According to recent data from the federal Bureau of Labor Statistics, hourly compensation for non-farm businesses increased 3.9 percent, a 2.8-percent increase over last year.

As businesses know all too well, higher compensation equals higher taxes. With employers matching employees’ Social Security and Medicare contributions, wage increases of just a few nickels can lead to thousands of dollars in higher payroll taxes.

Furthermore, workers compensation insurance rates are also rising or expected to rise in many states. Last year, multiple states increased workers comp rates and more states are likely to follow suit. Furthermore, employers need to have a workers comp policy in case an employee gets injured on the job.

The solution to higher costs

Many companies address rising labor costs by opting to fill certain positions with temporary or contract workers. In addition to the rising costs cited above, companies also have to pay benefits like 401k contributions and paid time off.

When companies leverage a custom staffing solution through Quanta, they offload many of these costs to us. If you would like to know if a custom staffing arrangement would help your company cut costs while maintaining quality and productivity, please contact us today.