Health Care Reform Employer Question

A response to a question from a concerned employee.

Question: Why is an employer of several employees opting to hire only part time people now with the health care reform bill–why aren’t the penalties for doing this more severe?

Response: Some employers are indeed responding to the health reform bill by changing their workforce structure which may include changing their workforce to include more part time employees. This is a strategy, in part, to avoid the pay or play shared responsibility penalties which is levied on full time employees (working greater than 30 hours per week) who receive a subsidy on the exchange. In cases where an employer doesn’t offer health insurance, the penalty is based on all full time employees if one full time employee receives a subsidy on the exchange.

As health reform becomes more clear, employers are going to formulate these changes into their strategic planning. On the one hand they will look to long term financial viability or how these changes impact financial performance. On the other hand employers will want to understand how potential decisions will affect key qualitative priorities such as employee morale, satisfaction, corporate image, etc.

One thing is for certain, it is becoming increasingly difficult for employers to be able to afford year over year increases in their health insurance premiums.

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