Health Reform Challenges Industries Reliant on Part-Timers

Retail and hospitality firms expect sharpest premium increases; may limit employee hours

By Stephen Miller, CEBS Aug 14, 2012

Employers that will be hit hardest by premium increases are those with large part-time populations—employers in retail and hospitality services, Mercer found. Nearly half of these employers (46 percent) expected the PPACA will push up costs by at least an additional 3 percent in 2014—and another third don’t yet know what the impact will be. By contrast, just 31 percent of respondents in service industries expect that PPACA provisions will result in increases of this size.

“With health benefit costs already rising at twice the rate of general inflation, an additional increase of 3 percent or more will be very tough for employers to absorb,” Sharon Cunninghis, leader of Mercer’s U.S. employee health and benefits business, told the press.

Across all industries, the not-for-profit National Business Group on Health expects the cost of employer-provided health care benefits at large U.S. employers to rise 7 percent on average in 2013.

Avoiding Penalties

Beginning in 2014, employers with 50 or more full-time equivalents (adding together the hours of part-timers) will be required to extend coverage to all full-time employees working 30+ hours per week or face possible penalties.

About a quarter of all survey respondents said they will have to take action to avoid these penalties. This ranges by industry, from just 16 percent of financial services employers to 46 percent of employers in retail and hospitality.


Changing Workforce Strategy

In industries that typically don’t use many part-timers, such as manufacturing, employers that are not already in compliance are likely to make uncovered full-time employees eligible under their employer-provided plan or add a new, low-cost plan for the newly eligible employees (68 percent), the survey found.

On the other hand, 67 percent of retail/wholesale employers not currently offering coverage to all employees working at least 30 hours a week were inclined to change their workforce strategy so that fewer employees meet the full-time threshold, whereas 41 percent of manufacturing employers were likely to take this approach.

Medicaid Qualification

Employers that were counting on some of their low-paid employees qualifying for Medicaid when it expands on Jan. 1, 2014, to include individuals with household income less than 133 percent of the federal poverty level (FPL) may have to rethink their plans in light of the June 2012 Supreme Court ruling upholding the PPACA. The ruling made it easier for states to opt out of the Medicaid expansion. One-fifth of survey respondents had benefit-eligible employees earning less than 133 percent of FPL. In industries such as retail/hospitality with large part-time populations, up to 50 percent of their benefit-eligible employees earned less than 133 percent of FPL.

Governors in some states, including Florida, South Carolina and Louisiana, have declared their intention to opt out of the Medicaid expansion.

Stephen Miller, CEBS, is an online editor/manager for SHRM.​

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