US – US employers slash worker hours to avoid Obamacare insurance mandate

US employers are planning to cut worker hours to reclassify some full-time workers as part- time. In response to President Barack Obama’s health reforms called Affordable Care Act (ACA), many companies are trying to avoid a mandate under the legislation requiring companies with 50 or more employees to offer those working 30 hours a week or more health insurance. 

Retailers such as Trader Joe’s and Home Depot have said they will no longer provide medical coverage for part-time employees and will shift them instead to the public healthcare exchanges which open from 1 October. Some employers have said their health costs will rise as a result of various provisions of the ACA, which takes full effect in 2015, when larger companies will have to provide health benefits to full time workers or pay USD 2,000 fine per-person. 

The trend has caused fears among low-paid workers living on the breadline, as they will be hit twice – by having their hours and thus earnings cut and by having to pay more for healthcare. 

A survey by the International Foundation of Employee Benefit Plans published last month found that 15 percent of large employers (50 or more employees) and 20 percent of smaller employers had plans to adjust hours so that fewer employees qualify for full-time medical insurance under the ACA. 

Kavita Patel, a fellow in economic studies at the Brooking Institution who worked on healthcare reform in the White House, said: “The big question everyone is asking is: ‘Will it increase the premiums?’ If you are being dropped by your employer and you are going into the exchanges, it depends on how much much money you are making. In New York, for instance, the rate in the exchange is cheaper than the group markets.” 

To hourly workers, many of whom are living below the poverty line, a small increase in healthcare costs can represent the final straw for their already stretched family budgets. 

People without health coverage in 2014 may have to pay a fine of up to US 95 per person and 100 percent of their healthcare costs.