“2013 is shaping up to be a very busy year for employers in all industries, with the continued implementation of the Patient Protection and Affordable Care Act (“ACA”). Recognizing that in 2014, applicable large employers will avoid ACA-related penalty taxes by offering required affordable group health plan coverage just to full-time employees (i.e., those working an average of 30 hours or more per week, as calculated in a number of permitted ways), some applicable large employers have already begun examining whether to cut their employees’ hours.
Considerations in the reduction of hours decision will vary by industry and by employer, and there is no one-size-fits-all approach. Some of the factors to weigh should include the following:
- How much will the costs of health coverage continue to rise for this employer? What portion of those costs are expected to be specifically attributable to these employees?
- What tax savings are currently available for the employer-sponsored coverage for these employees?
- Are there employee morale, recruitment, productivity, and/or retention issues to consider?
- Are there public relations or government relations issues to consider?
- How many part-time employees does the company currently have?
- Does the company’s business model permit a shift away from full time employment?
- Will salary increases be needed if no insurance is offered to these employees?
- How many of these employees are expected to be eligible for subsidized health insurance coverage in a state or federal exchange? (Note that employers are not advised to solicit pledges from employees to not seek a subsidy in exchange for continued full time employment.)