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ACA health benefits: Some employers rethink their workforce to avoid paying

November 5, 2012
by Pamela Tabar, Associate Editor
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The new health benefits requirements set forth in the Affordable Care Act (ACA) are prompting some employers to rethink their hiring mixes and increase their part-time ratios, according to the Wall Street Journal.

In industries that have large workforces of hourly employees—including hoteliers, retail stores and restaurants—some companies are reducing weekly hours and/or limiting overtime so that employees remain under the 30-hour-per-week cap for part-timers set forth in the ACA. Others are establishing the policy of converting vacant full-time positions into part-time positions, the WSJ article reports.

The trends are troubling for long-term care facilities, rehabilitation centers and home health agencies which rely on dozens of hourly workers in addition to salaried workers. More than half of the hourly positions in nursing homes pay less than $16.00 per hour, according to the 2012-2013 Nursing Home & Salary Benefits Report.

The changes in benefits mandated by the ACA require employers to offer coverage to all full-time employees and to ensure that the cost of that coverage does not exceed 9.5 percent of their W-2 income. Also, employee-sponsored coverage must include a host of free preventive services, and employers must contribute 60 percent of the benefit plan for full-time employees.

Although the new benefits rules are not slated to go into effect until 2014, many employers who intend to change employees’ hours are beginning to do so already, hoping to avoid the ACA’s look-back period for determining which employees are considered full time.

Employers have until March to make final decisions on whether to “play or pay.” The ACA mandates that on or before Mar. 1, 2013, employers must inform their employees of the company’s overall strategy concerning health benefit coverage, including the company’s intentions concerning health insurance coverage for its employees, the availability of state exchanges and the availability of tax subsidies under any Medicaid expansion.

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