What is your ObamaCare Strategy, do you have one? Einstein Consulting Group will be meeting with each of our clients in the upcoming months to discuss a strategy, answer any questions, and also invite you to seminars to keep you up to date on changes. We believe you will be pleased with some of the ideas available to address the increased cost caused by the mandate.
This month we look at one resulting strategy that some employers are taking to address the health insurance mandate for groups with greater than 50 employees.
The 29 Hour Work Week Club:
Finding full time jobs is not going to get any easier for the millions of Americans out of work. However, they may be able to find a part time job as a new trend is spreading across the county opening up additional part time options. Employers are incorporating a part of their strategy to address the impact of the Affordable Care Act (ACA) of cutting back on employee’s hours to avoid any penalties from and hiring new part time employees to ‘share’ the shifts. For anyone who is over 50 full time employees, they now must offer health insurance to all employees who work over 30 hours a week. There are many reports of businesses working to get around this portion of the law by reducing employee’s hours and hiring more part time workers.
The health care mandate requires groups with 50 or more full time equivalent workers to offer health plans to employees who work more than 30 hours per week. (The law says ‘equivalent’ because 2 fifteen hour employees equal 1 full time worker.) Employers that go over the number 50 and do not offer health insurance face huge penalties. This has left many companies whose total numbers of employees are in the forties, unlikely to expand their workforce.
Beginning January 1, 2014 employers with 50 or more full time employees (or full time equivalents) are liable for a penalty tax if ‘affordable’ coverage is not offered and an employee receives a federal subsidy through an exchange. To determine if your group has 50 or more full time employees, you divide the hours regularly worked by employees, including part time, by 30. This is the total number of ‘full time equivalent’ employees at your business. If this number is greater than 50, then the employer is expected to offer coverage to all of its full time workers. Employees who work at least 30 hours per week will be considered full time. The time period is a minimum of 3 months and max of 12 months to determine if an employee is full time.
A study by Hudson Institute estimates that this insurance mandate will cost the franchise industry $6.4 billion and could put 3.2 million jobs at risk. Many franchises such as Burger King, McDonalds, KFC, Red Lobster, Dunkin’ Donuts and Taco Bell have already started to cut back on full time employees.
The latest Department of Labor employment survey found that approximately 8 million people are underemployed, which means they may be employed, but are working part time but want a full time job. This number is expected to grow with the new healthcare law in place, and now there is an incentive to only hire part time workers.