Part-Time Workers to Lose Pay under Affordable Care Act

May 10, 2013

The Affordable Care Act ("ObamaCare") mandate requires large employers offering health insurance to include part-time employees working 30 hours a week or more. In response to this mandate, many employers are considering or have already cut back employee hours. The result is that many part-time workers will not only earn less money, but they will also be uninsured, says the Los Angeles Times.

  • Instead of extending health insurance to their employees, many employers are considering paying the federal penalty of $2,000 per worker that is levied when a company does not offer insurance.
  • In California, an estimated 240,000 workers in California are at risk of losing hours, including most of the City of Long Beach's 1,600 part-time employees who will now work an average of 27 hours a week.
  • The City of Long Beach could save $2 million by cutting payroll hours and otherwise would have to lay off employees or cutback city services.
  • The average annual premium in California last year was $6,540 while family coverage cost more than $16,000 a year -- a premium rise of more than 170 percent over the last decade.

Nationwide, an estimated 2.3 million workers could see their hours reduced at a time when a struggling labor market is adding an increasing number of part-time workers. For many of the part-time workers, their low incomes mean that they will qualify for expanded Medicaid coverage, another part of ObamaCare, if states choose to expand.

  • Employers that lower employee hours can avoid the $2,000 penalty and the responsibility of covering premiums.
  • Like Long Beach, the state of Virginia has opted to cut part-time employee hours instead of extending insurance coverage to its workers.
  • State of Virginia employees have been advised to work 29 hours or less to avoid hitting the 30 hour threshold.

Outside of government, private business like Darden Restaurants, which owns the Olive Garden and Red Lobster chains, have also opted to cut hours. Opponents of this decision have proposed additional fines for companies that lower employee hours but this could discourage hiring in a weak labor market.

Supporters of ObamaCare support companies pushing more workers into the exchanges, which they champion as the solution for the health care industry, though they are likely to raise prices.

Source: Chad Terhune, "Part-Timers to Lose Pay amid Health Act's New Math," Los Angeles Times, May 2, 2013.

 

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