Some Employers Might Reduce Workers' Hours To Avoid ACA Penalties

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Some low-wage employers -- such as hotels, restaurants and retailers -- are considering hiring or already have started hiring part-time workers to avoid the Affordable Care Act's requirement that large companies provide health insurance for full-time employees or pay a penalty, the Wall Street Journal reports.

According to the Journal, the move is one of the first significant steps by employers to avoid requirements created by the ACA.

Under the health reform law, companies with 50 or more full-time workers beginning in 2014 will be required to offer a minimum level of health coverage or pay a penalty, starting at $2,000 per full-time employee after the first 30.

If a company offers employee health insurance but the coverage is found to be minimal or unaffordable, the company will be required to pay a penalty of $3,000 for every worker who receives a federal subsidy to purchase health coverage on the individual market.

Employers Considering Options

Health benefit consultants say the requirement has caused most retail and hotel clients to explore limiting schedules of hourly workers to fewer than 30 hours per week, the threshold at which the law requires employers to provide qualifying coverage.

Those industries are less likely to offer plans that meet the minimum-coverage requirements, making them more susceptible to the law's penalties, according to the Journal. The consultants have warned that such a transition could result in productivity losses from high staff turnover and lower morale.

However, ACA supporters have noted that most large employers already offer coverage that meets the ACA's minimum standards. As a result, they say the provision helps to level the playing field among businesses without affecting employment.

According to the Journal, companies that typically offer full benefits have said they do not plan to make major changes because of the ACA. Further, several companies with a majority of hourly wage employees -- such as Costco, Marriott and Panera Bread -- said they do not plan to alter employees' hours in response to the ACA.

Erin Shields Britt, an HHS spokesperson, said federal officials do not expect the health reform law to "significantly impac[t] the labor market," citing the 2006 Massachusetts health law as an example (Jargon et al., Wall Street Journal, 11/4).

Most Small Businesses Do Not Understand ACA Requirements, Have Not Developed Plans for Law, Survey Finds

In related news, nearly 70% of small businesses misinterpret the ACA or are not sure if they will be required to offer health insurance to their workers, according to a survey by eHealthInsurance, the Houston Business Journal's "Houston BizBlog" reports.

eHealthInsurance surveyed 434 small businesses that purchased health insurance policies between Aug. 15 and Aug. 22 and found that 34% of small employers incorrectly believed they would have to buy health insurance for their employees under the ACA.

The survey also found that few companies have developed long-term plans based on their expectations of how the law will affect their businesses (Raji, "Houston Biz Blog," Houston Business Journal, 11/2).


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