Filed Under:Your Practice, Regulatory

Employers test mix of strategies to avoid PPACA

Employers that have pruned the hours of part-timers in response to Obamacare have generated plenty of headlines, mostly negative. But it’s not the only strategy they’re testing in hopes of sparing themselves the expense of buying health insurance for everyone.

Around the country, companies are beginning to share employees.

Concerns have been running high about how PPACA will impact business. A recent Gallup survey found that 48 percent of small-business owners say the law is going to be bad for business, compared with 9 percent who say it’s going to be good, and 39 percent who expect no impact at all.

The headline-grabbing response from business has, in part, included trimming of the part-time workforce. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. The Federal Reserve Bank of Minneapolis found that 11 percent of employers are shifting to more part-time employees or planning to do so in response to the new healthcare requirements.

Some businesses, especially those in the food-service world, are increasingly banding together to split an employee’s workweek between themselves and competitors. In other words, a cook might work 15 hours at one restaurant, put in another 15 at another eatery and wrap up with 10 hours at a third.

Labor interests might object that this approach amounts to exploitation, but advocates say it helps keep people fully employed, if not insured by an employer.

Meanwhile, employers also are turning increasingly to independent contractors to get work done.

Companies that use these “freelancers” generally don’t have to withhold or pay any taxes on payments they make to them and are not required to provide them with health insurance. The IRS, however, has been cracking down on the abuse by companies of the independent contractor classification and many employers have been fined.

John Duczak, senior VP at The American Worker, a Hoffman Estates, Ill., benefits company, points out the law itself might offer relief to at least some employers, even those with thousands of workers on their payroll.

The legislation’s “variable hour accommodation” allows employers to determine whether someone is a fulltime or part-time employee by the average number of hours that person puts in over a 12-month period. “Some companies are going to become very skilled in their management of that position” as a way of avoiding Obamacare’s coverage mandate, he said.

Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford

Nichole Morford
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