There’s a lot of talk about how Obamacare impacts companies and their workers, particularly part-time workers.
Some say part-time workers have some key advantages with Obamacare thanks to federal incentives to employers to offer coverage. Others say, and we’re already seeing this, companies will cut hours to avoid having to offer healthcare coverage to part-time employees.
So, which is it? Do each hold some truth? Let’s dig deeper.
We’ll look at the following three groups and discuss how the law impacts each one.
- Small businesses
- Larger companies
If you’re a business with fewer than 50 full-time employees, you aren’t required to offer health coverage. But what is considered a full-time employee?
Let’s say your company looks like this:
- 35 full-time employees (30+ hrs/week = 120 hrs/month each)
- 20 part time employees (24 hrs/week = 96 hrs/month each)
- Do you have to offer coverage? Yes
The government uses this formula to determine your total number of full-time employees.
20 part-time employees x 96 hours = 1920 /120 = 16 full-time employees
The final total is 35 full-time employees + 16 converted full-time employees = 51 employees
If you have fewer than 50 full-time employees, taking into account the calculations above, you won’t have to offer coverage, and won’t get a penalty. However, if you have more than 50 employees and don’t offer coverage, you may be required to pay an assessment of $2,000 per year for each full-time employee, excluding the first 30 full-time employees.
If you do offer coverage, but it’s unaffordable or lacks minimum value, you may be assessed a payment of $3,000 per year for each full-time employee receiving federal financial assistance.
Since employers with fewer than 50 full-timers aren’t required to offer coverage, you may be eligible to receive tax credits if you choose to offer coverage to your employees. The credits are up to 35% now and go up to 50% in 2014. Of the qualified premiums you pay for health insurance for your employees
Several companies such as Sears, Darden Restaurants, Applebee’s, Denny’s, and Papa Johns have publicly expressed concern over their ability to offer all full-time employees healthcare coverage in 2014. We’re also seeing businesses that say they will cut hours to avoid paying for insurance for full-time employees.
The bottom line is, if you have more than 50 full-time employees, you must offer affordable coverage to the employee and any dependents age 26 or younger (spouse is excluded) or face hefty fines – up to $3,000 per employee per year.
Check out this infographic for more information about the cost of healthcare for your business.
Let’s say your employer isn’t going to offer healthcare coverage. Where does that leave you in 2014 when everyone is required to have coverage?
The healthcare reform law will establish “exchanges” where individuals can go out and buy their own insurance. If you earn up to 4 times the federal poverty level ($44,680 in 2012), you qualify for tax credits. If you have an income of up to 133% poverty ($14,856 in 2012), you can be covered for free under Medicaid, provided your state has decided to expand coverage.
The “individual mandate” requires just about everyone to either choose a healthcare option or pay a penalty.
More to Come
This issue is always changing, and new information is constantly available. We’ll continue to watch to see how it plays out in the market. Then we’ll report any big news in a blog post. Stay tuned!