New health care law hits the job market
When the Affordable Care Act takes effect in 2014, some employers may cut workers' hours to avoid providing benefits.
Obamacare may be a certainty. But what it will mean for certain employees is anything but.
Take part-timers. Come 2014, people who work 30 hours a week could find themselves an endangered species. That's because companies with at least 50 full-time employees will be required to offer health insurance to anyone who works -- yes -- 30 hours.
That's got some employers worrying…full-time.
The math just didn’t add up for the Community College of Allegheny County in western Pennsylvania. Health care for 400 part-time staff and faculty would cost the school an extra $6 million a year. College spokesperson David Hoovler says, “We just simply do not have room in the budget to absorb that kind of cost.”
Come December 31st, the school will cut hours for part-time professors and secretaries. They won’t just miss out on insurance, they’ll take a pay cut too.
“They are not happy about this, and quite frankly we aren’t either,” says Hoovler. “Unfortunately, there really isn’t an alternative for us at this time.”
This 30-hours-a-week provision in the Affordable Care Act is forcing employers to make hard choices. Paul Fronstin with the Employee Benefits Research Institute says businesses must decide whether they can afford to give insurance to workers who don’t get it today.
“And if I can’t afford to pay for it, will my business suffer if I cut back on their hours,” he says.
For many employers, it’s too early to tell how things will play out. But Towers Watson consultant Geri Recht says there will be a lot of experimentation. She says she can imagine a day when some employers just stop providing insurance and sweeten the pot in other ways.
“Maybe we will give them an increased 401(k) plan, or 403(b) contribution. Maybe we’ll increase their pay,” says Recht. She says in that case, workers would buy their own plans from the publicly run health exchanges. Recht says maybe it’d be cheaper than what the boss could get you, plus you’d be making more money.