November 12, 2012
The re-election of Barack Obama to the U.S. Presidency and resulting lay-off announcements by 125+ American businesses that cite an inability to sustain the impending implementation of Obamacare to employee health plans has re-focused attention on the ongoing U.S. employee healthcare challenge. While analysts offer up various strategies to better-address the massive challenge that is forcing businesses to scale-back their workforce, reduce employee hours and/or pass expenses on to their customers, Tiger-Consulting has applied a simple solution to maintain and even thrive in the ever-evolving business environment, and suggests American businesses consider it as a possible way around the Obamacare challenge, if it can be applied in their case: third-party employment.
As unemployment rates continue to increase in the West, and more businesses are utilizing independent contractors to cut costs, Tiger-Consulting encourages American enterprises to hire freelancers through third-party employment services that can protect contractors by offering them employee-like benefits at no added cost to the company for which they work.
Third-party employers protect independent contractors by making available to them benefits that are typically enjoyed only by traditional employees. Tiger-Consulting’s staff members hired to support Asia satellite operations for our 100+ global enterprise clients enjoy a hybrid contractor/employee model that provides access to traditional employee benefits while clients can offer freelance talent added protection and incentive without making benefit contributions.
In America, employers must withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment tax on wages paid to an employee. They do not have to withhold or pay any taxes on payments to independent contractors. If contractors don’t pay into the unemployment insurance system, they are not covered when they lose their job. They also don’t have access to health coverage.
At Tiger-Consulting, contractors enjoy a hybrid contractor/employee position that offers benefits. Freelancers cover the cost of benefit contributions rather than the companies for which they work. However, contractors pay into group policies under the firm’s umbrella, which significantly reduces the cost the freelancers would otherwise pay for individual employment insurance or healthcare policies. When a contractor is between jobs, they can remain technically employed by Tiger-Consulting, and maintain their contributions to unemployment and medical insurance. If a contractor is laid-off or terminated, they can also collect unemployment pay.
As a third-party employer, Tiger-Consulting’s hybrid model solves the security challenge for our own staff as well as the team members we hire throughout Asia on behalf of more than 100 business clients. Our contractors enjoy the best of both worlds: flexibility, higher hourly rate AND predictable benefits.
Hiring through a third-party employer such as Tiger-Consulting allows businesses to easily offer the hybrid contractor/employee model to protect freelancers AND cut costs. It’s also an added hiring incentive that attracts top freelance talent. The model certainly is an added benefit to working with us. While it cannot be applied to all businesses as an alternative to Obamacare, we encourage our clients to inquire about this option to determine its viability for their business. If it helps to save jobs and keep hours at full-time for existing employees, it’s certainly worth an email or phone call to us, and we are happy to walk you through the process...
Founder & CEO, Tiger-Consulting