The CPA Practice Advisor recently released an article on the impact of the Affordable Care Act (also known as ObamaCare) on part time workers. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. The law exempts businesses with fewer than 50 full-time workers from this requirement to provide benefits. But rather than provide healthcare to more workers, a growing number of employers are cutting back employee hours instead. The result of this is that not only will these workers earn less money, but they’ll also miss out on health insurance at work.
Employers say these cutbacks are necessary given the high cost of providing benefits. The average annual premium for employee-only coverage was $6,540 in California 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 in the state. 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. 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.
“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.” 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.
Some California lawmakers worry that the federal penalties for not providing health coverage aren’t enough of a deterrent. They have proposed additional state fines to prevent major retailers, restaurant chains and other employers from restricting hours and dumping more of their workers onto public programs such as Medi-Cal. Opponents say the proposal is unnecessary and could deter companies from adding workers.
To read the full article, see http://bit.ly/13FxEMG.
No matter what businesses decide to do regarding this issue, there will be a significant impact on the profitability of businesses when this law goes into affect. Not sure what to do? Feel free to contact our office for referrals to insurance agents and/or CPAs who can help you analyze the impact this will have on your financial picture. We can be reached at 310-534-5577 or [email protected].
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