If you work for a company and are employed on a part time basis, beware! Due to mandates going into force by the Patient Protection and Affordable Care Act for employers, anyone working less than 30 hours most likely is going to go without health benefits at some point. PPACA, originally proposed as a way to help control health care costs, quickly morphed into a vehicle to control the insurance market. Regardless of your political bent, the end result of PPACA is that millions of employees are losing their insurance coverage. What the @%&#!!!
Many part-timers are facing a double whammy from President Obama's health care reform. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. But rather than provide health care to more workers, a growing number of employers are cutting back employee hours instead. The result: Not only will these workers earn less money, but they'll also miss out on health insurance at work.
Across the nation, hundreds of thousands of other hourly workers may also see smaller paychecks in the coming year because of this response to PPACA. The law exempts businesses with fewer than 50 full-time workers from this requirement to provide benefits. But big restaurant chains, retailers, and movie theaters are starting to trim employee hours. Even colleges are reducing courses for part-time professors to keep their hours down and avoid paying for their health premiums.
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Overall, an estimated 2.3 million workers nationwide are at risk of losing hours as employers adjust to the new math of workplace benefits, according to research in 2013 by UC Berkeley. All this comes at a time when part-timers are being hired in greater numbers as U.S. employers look to keep payrolls lean.
One consolation for part-timers is that many of them stand to benefit the most from PPACA's federal premium subsidies or an expansion of Medicaid. The law requires most Americans to buy health insurance or pay a penalty. Yet many lower-income people will qualify for government insurance or be eligible for discounted premiums on private policies.
According to an April 2013 survey conducted by the Society for Human Resource Management, 41 percent of 603 small business owners said they have delayed hiring because of the federal health care law. One in five already cut hours, while 20 percent have reduced payroll. Mercer, a human resources consulting company, said its own survey found that 12 percent of all U.S. employers reported plans to reduce workers' hours as a direct result of PPACA. The impact was more pronounced in the retail and hospitality industries, with 20 percent of employers saying they will cut part-time hours, according to Fox Business News.
As a result, companies are hiring part time employees over full time employees, or reducing hours so they don't have to pay benefits. Regal Entertainment, the nation's largest movie theater chain, which operates more than 500 theaters in 38 states, blamed Obamacare requirements for capping hours below the 30-hour threshold.
"To comply with the Affordable Care Act, Regal had to increase our health care budget to cover those newly deemed eligible based on the law's definition of a full-time employee," the company said in its employee memo.
"To manage this budget, all other employees will be scheduled in accord with business needs and in a manner that will not negatively impact our health care budget." And, New England Motor Freight, a New Jersey-based trucking company, implemented in June 2013 an hourly cap for about 400 part-time employees, saying the company can't afford to offer them health insurance benefits.
The private sector isn't alone in cutting hours for part-time employees, with more than 200 public-sector employers reducing hours to avoid PPACA penalties, according to a list compiled by Investor's Business Daily. In fact, according to Fox News, the effect of PPACA thus far appears to be more pronounced in the public sector. Many U.S. towns and counties have joined in and cut part-time hours, and the business newspaper tallied 34 universities and colleges in 2013, including college systems, that are doing the same for part-time or adjunct faculty.
And the beat goes on. Jodee Kazlak, the HR honcho at Target Corporation, was the latest executive to announce that part timers are going to go without insurance benefits. Take that Red Card! Maybe it's because they don't want to pay for benefits due to the restrictions under the law, or the cost, or the completely embarrassing fiasco this past Christmas that had over 40 million consumers and untold financial institutions scrambling to figure out what card data had been breached.
Talk about a payment card compliance nightmare. Under those rules, any breach costs the holder a fine of up to $100,000 per month for PCI compliance violations per card number, according to the PCI Compliance Guide organization. That's a lot of cash to fork out for not diligently monitoring your servers.
Target plans to pay $500 to part-timers losing coverage and a consulting firm will help those workers sign up for new PPACA plans. It said on its website that many part-time workers may prefer coverage from the health law's exchanges, according to Townhall Finance online. Right.
But Target isn't the only guilty party in the employer world. They are joining a list of major companies (Darden Restaurants, Wegman's, Home Depot, Trader Joe's) that have decided to jettison coverage for their part time human capital. Yet, these folks are a large part of what makes these companies function.
So, what's happening in the job market? The number of "involuntary" part-time workers — people who want a full-time job but can't find one or have had their hours cut back by their current employer — has nearly doubled since 2007 to about 8 million people, according to NBC News. The current part time work force nationally sits somewhere around 27 million when you count the additional 19 million working voluntarily on a part time basis. Is PPACA to blame? Some say yes, and some no — largely based on how they read the economy. Some of that perception is also politically driven.
According to Mesirow Financial, the rise in people working part-time involuntarily is blamed on PPACA, which will require businesses with 50 or more employees to provide health care to those working 30 hours or more per week. Concerns about the impact of the new health care requirement on small businesses, originally slated to begin in 2014, prompted the Obama administration to put it off one year until January 2015.
Regardless of the economy, or PPACA, or politics in general, what is known is that people are getting cut from their benefits. Right now, the largest long term unemployment in the nation since 1930 is making it difficult for families to make a living, get affordable healthcare coverage, and make ends meet. Elections have consequences.
But aside from that, the real sticker shock is going to happen in 2015 for businesses, and it's happening now for people who buy their own insurance and for part timers now being forced to fend for themselves in the insurance market place.
According to the Washington Post, Americans who face higher insurance costs under President Obama's health care law are angrily complaining about sticker shock, threatening to become a new political force opposing the law even as the White House struggles to convince other consumers that they will benefit from it. The growing backlash involves people whose plans are being discontinued because the policies don't meet the law's more-stringent standards. They're finding that many alternative policies come with higher premiums and deductibles.
Employers continue to brace for the impact of the employer mandate portion of Obamacare which hits in 2015 (delayed from 2014), according to Fox Business News. Numerous companies have abridged their payroll and hiring practices citing the costs the reform imposes, including office retail giant Staples, catalog retailer Land's End, and SeaWorld. Under the employer mandate portion of PPACA, employers with at least 50 or more full-time workers, defined as those working more than 30 hours a week, will be required to offer workers insurance or face a penalty of $2,000 per worker, per year.
Bad law leads to bad consequences. So, what are you to do? As an employer, start stashing the cash or go self-funded. As an employee, look for ways to become more valuable to keep your full time job; as a part-timer find a second job to make up the difference. Or, start your own business, go to the exchange to find the best affordable coverage, and save your money.
If you are a broker, the options for voluntary benefits are exploding right in front of you. It's a veritable gold mine of opportunities.
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