Monthly Archives: May 2013

How Obamacare May Affect Part-Time Employees

According to an article by Chad Terhune of the LA Times dated May 2, 20013 many part-time workers are facing a number of issues as a result of the initiation of the Affordable Care Act (ACA).   The law requires businesses with more than 50 workers to include insurance coverage for employees working 30 hours per week or more.  Rather than providing healthcare to more workers a number of employers are cutting part-time employee hours instead.  The result is that these workers will not only earn less money but will also not receive heath coverage.

Examples of this phenomenon include:

*The city of Long Beach is limiting most of its 1,600 part-time employees to less than 27 hours/wk on average.  City officials respond that without cutting payroll hours the new health benefits would cost up to $2 million more next year, which could result in layoffs and cutbacks in city services.

*Many large restaurant chains, retailers and movie theaters are cutting part-time employee’s hours.

*Even colleges are cutting courses for part-time professors.

*Last year, in a well-publicized test Darden Restaurants, which owns the Olive Garden and Red Lobster chains began shifting to more part-time workers.  Darden dropped the plan after substantial criticism.

According to research by UC Berkley, an estimated 2.3 million workers nationwide (240,000 in California) are at risk of losing hours as employers struggle to find ways to remain fiscally sound.  Employers cite these cutbacks as a necessity, given that the average annual premium for employee-only coverage last year in California was $6,540.  Family coverage topped $16,000 a year.  These premiums have shot up 170 % in the last decade.

Given these figures, many companies have considered simply dropping employee health coverage and paying the federal penalty of $2000 per worker, but most businesses have rejected that option due to the disruption with existing employees and in order to stay competitive in the market place for talented workers.

Some California lawmakers worry that the Federal penalty is not a sufficient deterrent and will not prevent major employers from restricting hours and placing more workers onto public programs.

One consolation for part-time workers is that they can benefit from the healthcare initiative’s federal premium subsidies or by the expansion of Medicaid (Medi-Cal) beginning in January 2014.

“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.”

Whether you are an employer searching for answers to remain economically sound, while providing the best health benefits for your valued employees or a part-time worker in need of answers regarding eligibility for discounted premiums or government subsidies, Jordan Financial Services has the expertise to seek out and implement the perfect solution to all your insurance needs.