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Health Law Consulting Blog

Wednesday, September 25, 2013

What Part-Time Employees Need to Know About PPACA

The employment status of several individuals across the nation may soon change once key provisions of the Patient Protection and Affordable Care Act (ACA) take effect.  In particular, some employers are shifting their employees from full-time to part-time employment status to avoid paying additional costs pertaining to the employer mandate provision of the ACA.

Read on to learn more about what is happening to employees under the new employment mandate provision of the ACA.

The ACA’s Impact on Employment Status

The employer mandate provision requires companies with 50 or more full-time employees to provide “qualified” healthcare coverage to these employees, or pay an annual penalty of $2,000 per each full-time employee (after the first 30 full-time employees are assessed) if qualified coverage is not provided. 

Under Section 4980H of the Internal Revenue Code (IRC), a full-time employee is defined as an employee who is employed on average at least 30 hours per week, calculated on a monthly basis, which the regulations equate to 130 hours per month. An employee's hours of service include: (1) each hour for which an employee is paid, or entitled to payment, to perform duties for the employer; and (2) each hour of paid leave.

Current statistics show that “300 employers have cut work hours or jobs, or otherwise shifted away from full-time staff, to limit liability under [ACA] according to newly updated IBD analysis.”   Part-time employees who currently work 32 hours per week are the most at risk. For instance, with a reduction in work hours, reclassified part-time employees will definitely fill a financial strain.  Not only will they receive less income, but they will also be without employer provided healthcare coverage. 

Duane Davis has personally felt the impact of such employee reductions.  Davis previously worked 30 to 40 hours per week at Juicy Couture in New York City. He would have been eligible for employer-paid health care insurance starting next year.  However, earlier this year, Davis was told that he could not work more than 23 hours per week. He stated that “if we…ever [go] over those hours, they’d tell us to go home…because we were going over the amount of hours that we were given for the week.”

Davis also commented that business was up in the store, but personally believes (though he has no proof) that the company is preparing for the new health care law.

Health Care State Insurance Marketplace

Part-time employees who do not receive healthcare coverage from their employer will be required to purchase insurance on the “individual” market, or through state marketplace exchanges.   If individuals do not have insurance coverage, they will have to pay a tax penalty beginning on January 1, 2014. 

Further, part-time employees, who obtain insurance through the private market, or through state exchanges, may qualify for generous tax credits.  These tax credits will be available for lower to middle income individuals and families who meet specific healthcare coverage requirements. 

Additionally, all businesses will be required to provide employees with notices advising them of the existence of a statewide health insurance marketplace. This mandate applies to all employers engaged in interstate commerce or with at least $500,000 of sales per year.  The notice must provide employees with information necessary to make informed decisions about their health insurance.

Feel free to connect with me for more information regarding the impact of the ACA on part-time employees.  I can help you prepare and distribute materials helpful to providing part-time employees with information pertaining to the state health insurance marketplace. 

Sources

ObamaCare Mandate: 301 Employers Cut Hours, Jobs

As Health Law Changes Loom, A Shift To Part-Time Workers

October 1st Deadline Approaching: Employers Must Provide Notice to Employees of Health Insurance Exchange Options

Section 4980H of the Internal Revenue Code





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