Thursday, May 2, 2013

Mainstream Media Gets It: The 29-Hour-ObamaCare-Work-Week Has Arrived

MDW has blogged about it for quite some time. It was an early observation.

Finally mainstream media is reporting on what was obvious. The latest: LA Times is reporting:
Many part-timers are facing a double whammy from President Obama's Affordable Care Act.
The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. But rather than provide healthcare to more workers, a growing number of employers are cutting back employee hours instead.
The result: Not only will these workers earn less money, but they'll also miss out on health insurance at work.
Consider the city of Long Beach. It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average. City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.
There is still some confusion out there, and I've seen it both ways. The question is this: who determines the number of part-time workers an employer has? The employer or the IRS. If it's the IRS, which I suspect, this will be quite a surprise for some employers.

Let's consider a company with 100 employees, and they are all considered part-time by the employer, each working less than 30 hours, to fall under the 30-hour threshold. Let's say 25 hours each. The employer tells the IRS the company has 100 part-time employees and is not subject to requirement to provide $2,000/employee for ObamaCare health insurance.

The IRS says: 100 workers x 25 hours = 2500 hours. Twenty-five hundred hours divided by the 30-hour threshold, and one gets 83 full-time equivalents. The IRS will tell the employer to pony up enough health care to cover 83 FTEs. In fact, the IRS will do the calculations over a two-week pay period but the math works out the same.

So this employer who thinks he/she has no full-time employees (except himself/herself) will be told by the IRS he/she has 83 full-time employees. 

Again, I don't know. I've seen it both ways. But I don't think the IRS is going to let employers define part-time employees. [Later: I'm being told that rules may be different for companies with federal contracts.]

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