New Health Insurance Requirements for Large Companies under Affordable Care Act May be By-passed by Switch to Part-time Workers

While President Barack Obama will forge ahead with his hard-won Patient Protection and Affordable Care Act, often referred to as Obamacare, should he be re-elected tomorrow, Republican challenger Mitt Romney, the former governor of Massachusetts along with the rest of his party, has vowed its destruction.

Meanwhile, industries that currently do not offer health coverage to full-time workers, primarily retail and hospitality, are looking for ways to circumvent the requirement by hiring more part-time workers, or reducing the hours of full-time staff, The Wall Street Journal reported today. 

If they don’t, by 2014, these companies will be forced to make health care coverage available to full-time workers, or pay a $2,000 fee for each worker who is not covered after the first 30. In general, the rule applies to companies with 50 or more full-time workers. The companies must also pay an additional $3,000 penalty for employees who get a federal tax subsidy to purchase coverage as an individual, if the coverage offered is inadequate or too expensive, the WSJ reported.

No doubt expressing the concerns of many business owners, Chief Executive Officer Alan Gladstone of the home-retailer Anna’s Linens Inc., told the paper the cost of providing coverage for its more than 1,000 salespeople would be “prohibitive.”

The threshold at which large employers will have to offer workers insurance or pay a penalty starting at $2,000 for each worker, is 30 hours a week.

An analyst interviewed by the WSJ calls the shift to part-time workers, “One of the first significant steps by employers to avoid requirements under the new health care law.”

The paper also mentioned that benefits consultants for most retail and hotel chains have considered using more part-time workers to avoid the added expense and pointed out that companies in industries that already offer adequate health insurance benefits for full-time workers are not attempting to make any changes vis-à-vis the new law.

Latino or Hispanic workers made up 14.4 percent of all employees in the U.S. in wholesale and retail in 2011, and 12.3 percent of leisure and hospitality workers, according to U.S. Bureau of Labor statistics.

President Obama signed the federal statute into law on March 23, 2010. This summer the Supreme Court upheld the law’s constitutionality after it was challenged by opponents of the “individual mandate” which requires individuals who make a certain amount of money but do not purchase health insurance to pay an additional tax. The plan is schedule to take full effect in 2014.