Will Obamacare Reduce your Working Hours
One of President Barack Obama’s major campaign initiatives was to introduce universal health care coverage. After only one year in office, during his first term, Congress passed thePatient Protection and Affordable Care Act(PPACA), which has come to be known as Obama-care or Health Care Reform. The new law is lengthy and for many people it is very confusing. As the implementation of its 450 provisions is on a graduated schedule it will be a few years before the law’s impact will be fully realized. One primary area of concern is the impact on small business owners, which for the purposes of the PPACA means less than 50 full-time equivalent (FTE) employees. This will technically define businesses with more than 50 FTE employees as large businesses and demand provision of adequate, affordable health care coverage to employees, or risk penalties in the form of taxes.
Smaller businesses are prone to higher only the necessary number of employees to get the job done efficiently and yield the best profit. Profits can then be rerouted back into the growth and development of the business. Many of these smaller businesses aren't in the habit of providing health insurance benefits to employees and pay only minimum wage or slightly higher. Health benefits are part of an employee’s compensation, along with salary or hourly wages. Where companies employ less than 50 FTE workers the employer will not be mandated to provide health insurance coverage. This means they won’t have to change their employee compensation or create new business expenses paying for health care premiums. These businesses will need to consider future expansion and the potential to hire more employees. Once they pass the 50 FTE employee threshold they will be accountable for PPACA compliance.
Businesses with more than 50 FTE employees will immediately see the effects of Obama-care as they will be facing taxes and penalties if they are out of compliance with the new law. Some areas of compliance involve offering health care coverage to all of their employees, ensuring that the plans offered do not exceed 9.5% of the employee’s household income as a premium and offering the same coverage to all employees regardless of the level of compensation an employee receives. This means that the executives and the customer service representatives should have access to the same quality of plan. If a business is out of compliance with any of the regulations they will befineda set dollar amount multiplied by the number of employees they have after the first 30 employees, meaning a company with 60 FTE employees will pay 30 times the fine dollar amount.
Companies who are out ofcompliancewill need to come up with money to pay non-compliance penalties. Companies who are in compliance who weren't providing insurance before this law will need to come up with money to pay for the cost of coverage. This money will need to come from somewhere. The most obvious ways to increase money to pay for the new law’s provisions will be to reduce employee wages, reduce number of employees or working hours and to increase prices for goods and services. As full-time employees require health care coverage being offered, and part-time employees do not, it might seem like a good solution for employers to reduce employee hours to part-time designation. While this doesn't seem likely to be the first step taken, it is possible that the implementation of the PPACA will lead to reduced hours for employees in this manner. Unfortunately it seems more likely that employee positions would be cut altogether in order to avoid the 50 FTE employee threshold.
Obama-care doesn't directly reduce anyone’s working hours. Any hourly reduction would come from an employer who is unable to pay to meet the necessary requirements set forth by the law, or by an employer being unable to expand the growth of his business and increase an employee’s hours because there are insufficient funds available. Reduction of hours is more likely to come in the form of being laid off or terminated, or by not being able to find a new job because employers cease to hire new people. Another possible outcome is that with an increase in compensation coming by way of mandatory health care coverage employers will begin to demand more from employees and hours worked will being to increase. But until the full 2,000 plus page law is more fully understood and disseminated into the public’s attention the full impact of Obama-care remains unknown.
