Part-timers Lose Pay Due to Affordable Care Act

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Part-timers Lose Pay Due to Affordable Care Act

Posted by: Cali F. ()

Date: May 02, 2013 02:00PM

Some workers are having their hours cut so employers won't have to cover them under Obamacare. But many did not expect state and local governments to follow the lead of the private workforce.

"I understand there are costs to healthcare reform, but it is surely not the intent of the law for employees to lose hours," says Tara Sievers, who works part time as an outreach coordinator.

The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. But rather than provide healthcare 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.

Fairfax County and Fairfax County Public Schools are two of those large employers. With thousands of part-time employees, both organizations are looking toward limiting most of their part-time employees to fewer than 27 hours a week, on average. County officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in services.

Part-timer Tara Sievers, 43, understands why, but she still thinks it's wrong.

"I understand there are costs to healthcare reform, but it is surely not the intent of the law for employees to lose hours," said the outreach coordinator. "It's ridiculous the county is skirting the law."

Across the nation, hundreds of thousands of other hourly workers may also see smaller paychecks in the coming year because of this response to the federal healthcare law. 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.

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 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 the healthcare law's federal premium subsidies or an expansion of Medicaid, both starting in January.

The law will require 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.

"For people losing a few hours each week, that's lost income and it has a real impact," said Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education. "But many low-wage, part-time workers will also have some affordable options under the federal law."

Employers say these cutbacks are necessary given the high cost of providing benefits. The average annual premium for employee-only coverage was $6,540 last year. Family coverage topped $16,000 a year. Those premiums have shot up 170% in the past decade, more than five times the rate of inflation.

Bill Dombrowski, chief executive of the US Retailers Assn., said employers are reducing hours because "it's the only way to survive economically."

The full effect of these changes in the workplace isn't known yet because many employers are still considering what to do. Many companies waited to see whether the landmark legislation would survive a Supreme Court challenge and the outcome of last fall's presidential election.

Now many employers are scrambling to understand the latest federal rules on implementation and are analyzing what makes the most sense for their workforce and for running their business.

There has been widespread speculation that many businesses would drop health coverage entirely in favor of paying a federal penalty of $2,000 per worker. Benefit consultants and insurance brokers say many companies examined that scenario. But they say most rejected it because of the disruption it would cause for employees and the potential for putting an employer at a competitive disadvantage in luring talented workers.

Instead, pruning the hours of part-timers has attracted far more interest.

"That will be a widespread strategy," said Dede Kennedy-Simington, vice president at Polenzani Benefits. "Employers will be making sure their payroll system can flag when part-time workers are getting close to the cap they set."

"It's difficult," said one county official who requested not to be identified because they are not authorized to discuss policy. "We're in the same boat as many employers. We need to maintain the programs and service levels we have now. The county, as well as our Congressional delegation, wants to support the President's health care reforms as best we can. Yet we know that many part-timers are already struggling to get by in these jobs."

Some supporters of the Affordable Care Act say they welcome a gradual shift away from employer-sponsored coverage if new government-run exchanges give consumers a choice of competitively priced health plans. Some low- and middle-income workers who qualify for federal subsidies may end up paying less by buying their own policy next year compared with their contribution toward employer coverage.

"If the exchanges work," said Nelson Lichtenstein, a labor expert, "then I'd be in favor of more people getting covered that way rather than through employers."

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