Do Part-Time Workers Want Health Benefits?

By , FOXBusiness

Much of the controversy surrounding the new requirement that employers offer employees who work 30 hours a week eligibility to health benefits in January 2014 has focused on the burden it places on the company’s bottom line. The requirement hinges on a new definition handed down by the federal government designating full-time workers as employees who work  30 hours a week—a designation that companies often consider part-time—and raises the question as to whether come 2014 this current group of part-timers will opt-in or opt-out.

Continue Reading Below

Currently only slightly more than half of part-time workers who are eligible for health benefits through their jobs currently enroll, according to a recently-released survey released from ADP's ADP Research Institute of more than 300 large employers. With today’s part-time workers comprising 23% of the workforce and 15% of these part-timers being eligible for benefits, only 8% opt-in.

The Patient Protection and Affordable Care Act (ACA) requires that businesses with more than 50 full-time workers offer health insurance to those working at least 30 hours a week or face a prorated $2,000-per-year per-worker fine. Because of this, many surveys and research has shown that businesses will trim the hours of full-time workers and curb hiring.

The high cost of health care makes employee-sponsored coverage a coveted benefit for many workers, but might not be the most desirable for part-time workers. Spouses supplementing the family income of a primary breadwinner or young workers still going to school typically comprise the part-time segment. These workers may not need coverage because they are covered under the benefits of a working spouse or a parent.

Affordability is also a huge factor for this group of workers, says Christopher Ryan, ADP Strategic Advisory Services’ chief strategy officer and study co-author. Part-time employees, particularly those living on their own, spend their pay checks on rent, to buy groceries or other consumables.

Come 2014, if employees elect the coverage, a certain percentage of their paychecks will be dedicated to benefits. The health care reform mandates the employee contribution cannot exceed 9.5% of a person’s individual income. That’s considerably less than current contributions for some employees who pay as much as 24% of their premium, experts claim, but it’s still a chunk of money when taken out of an on-average part-time paycheck, which according to Simply Hired’s Pay Scale, could be as low as little more than $8.00 per hour.

But how employer’s respond to the mandate with their employment practices has a domino effect on workers’ pocketbooks, says Mark Cesarano, managing consultant at the Savitz Organization. Whether an employee opts in or not may be less of a consideration than his or her concern about a reduction in working hours and likewise, a lesser paycheck.

Complying with the law by funding the health benefits of newly eligible employees would inevitably spike an employer’s overall cost of doing business, says Ryan.

What’s more, the new health care law is not just a benefits issue, says David Marini, vice president, ADP Strategic Advisory Services. It impacts a company’s entire human capital strategy and the way an organization manages its workforce. Employers will have to evaluate the administrative practices like payroll or other compliance reporting which will contribute to the cost of doing business.

The mandate forces employers to think through their workforce management procedures with part-time or seasonal workforces to determine which part-time or contingent employees work 30 hours or more each week. Employers will need better tools to manage their businesses and evaluate during look-back periods established by guidelines from whether a part-time, contingent or seasonal employee is eligible for benefits, says Ryan.

The IRS has also established regulations to prevent employers from finding loopholes to the mandate. For instance, Cesarano says employers cannot arbitrarily stop an employee from working 30 hours in any given week.

That being said, in some cases, some employers are already cutting part-time hours for low-income workers and this has given part-timers particularly in industries like food services a cause for worry.

Food service companies like Olive Garden and Red Lobster owned by Darden’s Restaurants and some Wendy’s and Taco Bells have pulled back employee hours, but faced backlash from consumer groups who claimed the intent of these actions was to avoid giving lower-income workers benefits.

Some consumer organizations may be marshalling their forces to fight companies from gaming their lower-wage workers to avoid a small penalty, says Kathleen Stoll, Families USA’s director of health policy.

But it is necessary to remember there is a strong business case for mandates that come out of ACA. It is important to communicate this message to employers, says Stoll. For example, having and using a health benefit leads to a healthier and more productive workforce, which in turn reduces a company’s need for and cost of recruiting and development. “Our role is not shaming businesses but rather to help employers see the law is good for workers.”

What do you think?

Click the button below to comment on this article.