Sunday, October 26, 2014
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Will your employer cut your hours because of Obamacare?

The law requires employers to offer health coverage to all full-time workers. They can avoid the rule by reducing an employee's hours to fewer than 30 a week, which is the cut-off for part-time status. Some companies have already said they plan to do so for some workers.

Will your employer cut your hours because of Obamacare?

President Obama (AP Photo/Jason Reed, pool)
President Obama (AP Photo/Jason Reed, pool)

Could Obamacare cause you to lose paid work time?

The law requires employers to offer health coverage to all full-time workers. They can avoid the rule by reducing an employee’s hours to fewer than 30 a week, which is the cut-off for part-time status. Some companies have already said they plan to do so for some workers.

If you are cut back to part-time status, you could find yourself in a bind. Your employer doesn’t have to offer coverage, but the law’s mandate still requires you to have it. Fewer hours could also mean less money with which to buy a policy on your own.

But don’t worry too much. If recent trends are any guide, it is not likely to happen. A study by human resources consulting firm Mercer found that fewer than 12% of companies plan to reduce workers’ hours because of Obamacare. And a survey of employers by a second firm, Aon Hewitt, found that 94% are committed to offering and financially supporting worker coverage under the law.

These findings are supported by a recent review of Minnesota state data on job openings by the Minneapolis Star Tribune. It found no difference in the percentage of jobs labeled part-time or seasonal between 2008 before the law was enacted and 2012 when implementation was approaching.

And those studies don’t take account of predicted economic expansion over the next few years. As the economy grows, companies will face fiercer competition for workers, and offering health benefits can make a huge difference in attracting applicants.

What’s more, many of the employers who say they will cut worker hours may end up not doing it. The disruption to their workforces from reducing hours could be more costly than the addition of health insurance.

One exception may be companies with slightly more than 50 full-time workers. If they cut back to fewer than 50, they can avoid the law’s mandate to provide coverage completely. But for larger firms, the cost of implementing workplace changes is much less likely to be worth it.

Of course, many companies already keep workers on part-time status to avoid having to provide them with health coverage. There’s been a trend in that direction for several years, starting before Obamacare was passed. Those companies would keep doing it regardless of the law.

If you already work part-time, Obamacare could be a huge boon. A recent study by ADP Research Institute found that only 8% of part-timers are presently enrolled in their employers’ health plans. Most are not eligible for benefits, and many of those who are can’t afford the premiums.

Under Obamacare, part-time workers are guaranteed the ability to buy a policy on their own on an exchange regardless of their health status. And those with low incomes can get subsidies to help with the cost.

So, indications are that the dire predictions of job losses due to Obamacare have not come to pass. Whether employers will change their behavior after the law fully takes effect in 2014 remains to be seen. What is certain is that millions of workers who presently don’t have health coverage will be able to get it.

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