Archive | Employers Reaction to Bill

ObamaCare Fuels Sharp Workweek Drop In 4 Industries

Anyone who insists ObamaCare employer penalties aren’t having a meaningful impact on work hours simply hasn’t looked closely at the evidence. In  a private economy with 114 million workers clocking 34.4 hours a week on average, it’s easy to miss important changes. What feels like a wave to modest-wage workers getting hit may appear to be a mere ripple from an altitude of 40,000 feet.

  • It’s not hard to find industry groups with an unprecedented drop in work hours. Among retail bakeries, home-improvement stores and providers of social assistance to the elderly and disabled, the workweek for non-managers has fallen to record-low levels — by far. At general merchandise stores, department stores and discounters, the rate at which the workweek has fallen since early 2012 is way off the charts relative to prior data going back to 1990.

Historic Decline

  • This historic and simultaneous shift in hours worked across multiple industry groups has occurred just as a sizable incentive for reducing hours was set to take effect, and amid a multitude of reports that companies are altering their employment practices to dodge ObamaCare fines. The industries listed above are among the most logical to test for an ObamaCare effect because the average workweek has been above, or at least close to, 30 hours — the point at which ObamaCare makes employers liable for health coverage.
  • In assessing whether ObamaCare is hitting work hours, it’s also logical to look at industries that 1) feature modest-wage jobs requiring limited specialization; 2) have a high percentage of jobs at firms with at least 50 full-time-equivalent workers — the point at which ObamaCare’s mandate kicks in; and 3) don’t have a large share of workers who are undocumented, because they are ineligible for ObamaCare, giving employers no incentive to cut their hours.

Half-Time Baked

  • The average workweek at retail bakeries has plunged 7.7% since the start of last year, from 29.8 hours to 27.5 hours. Krispy Kreme Doughnuts said in September 2012 that 1,300 employees, about 35%, lacked employer coverage but could be entitled to it under ObamaCare.
  • The company said compliance costs would likely be below $5 million, before “any mitigating actions … to reduce the cost of the benefits … (or) the number of employees subject to the new requirements.” Of 500 employees Krispy Kreme added in the year ending Feb. 3, at least 80% were part-time — a clear shift for a firm whose store staffing was more than 60% full-time.

Permanent Temps

  • A Reuters survey in June found that 27 of 52 Wal-Mart stores contacted were hiring only temporary workers, who might not be around long enough to trigger employer penalties. Temps’ share of Wal-Mart’s workforce has surged from 1%-2% at the start of 2013 to “fewer than 10%.”
  • One might have expected the housing rebound to partly reverse, or at least stem, a slide in the workweek at retail home centers. Instead, after stabilizing in 2011, average weekly hours for non-managers have fallen another 4.7% since the start of 2012, from 32 hours to 30.5.

*Modified from an Investors.com article
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ObamaCare Dropping Full-Timers at Schools, Local Governments

Health reform is now causing job turmoil across the country in three key groups that the White House has depended on for support—local government, school workers and unions.

  • School districts in states like Pennsylvania, North Carolina, Utah, Nebraska, and Indiana are dropping to part-time status school workers such as teacher aides, administrators, secretaries, bus drivers, gym teachers, coaches and cafeteria workers. Cities or counties in states like California, Indiana, Kansas, Texas, Michigan and Iowa are dropping to part-time status government workers such as librarians, secretaries, administrators, parks and recreation officials and public works officials.
  • This growing trend comes as three major unions have written to Democratic Congressional leaders Nancy Pelosi and Harry Reid warning that, because health reform is helping to push the work week to below 30 hours, it will “destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”
  • Nearly three-quarters of government employers provide generous benefits to workers, funded by taxpayers, higher than any other industry, says the Kaiser Family Foundation.
  • But the quarter that do not are making rapid changes to the work week. To stop the wheels from coming off the school bus, school districts are doing the math, and are figuring out that cutting worker hours down to part-time status, or paying the mandate tax, or dropping part-time coverage is less expensive than offering health insurance benefits.
  • Cities across the nation are discovering that the extra expense from health reform will trigger layoffs and cutbacks in city services like public works, city jails, government workers in nursing homes, parks and libraries if they don’t push government workers down to part-time status (see below). Some plan to hire even more part-time employees to make up for the lost hours, city officials have said.
  • The irony is, health reform could fix the soaring pension and retiree health benefits owed by government agencies across the country, as numerous municipalities consider moving to a part-time workforce, analysis shows.

SCHOOL DISTRICTS

  • Schools throughout Indiana are cutting back the hours of teacher assistants, bus drivers, cafeteria workers and coaches to avoid having to offer them health insurance under the new federal employer mandate.
  • The Wake County Public School System in North Carolina is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1. The school district figured that, if just a third of these subs got employer health insurance, it would cost it about $5.2 million.
  • The Southern Lehigh School District in Pennsylvania voted to cut the hours of 51 part-time secretaries, custodians and cafeteria workers to avoid the health care mandate.
  • In Nebraska, public school districts have been contemplating cutting worker hours to avoid the extra expense of health reform. Attorney Karen Haase who represents roughly 150 school districts in the state, estimates thousands of non-teaching jobs, such as bus drivers, cafeteria cooks, teacher aides, janitors, and administrative workers, may see their hours cut, layoffs and hiring freezes.  
  • Between 1,000 and 1,200 of teacher aides, substitute teachers, administrators, cafeteria workers, bus drivers, and security officers and other workers in the Granite School District outside Salt Lake City, Utah, will see their part-time hours reduced due to the costs of health reform.
  • Already, colleges and universities have been cutting back hours of adjunct professors. Youngstown State University in eastern Ohio will limit the hours of non-union part-time employees like these professors to 29 hours a week or less to make sure that the university is not required to provide them with health insurance coverage under the new law.

MUNICIPAL WORKERS

  • Officials in Floyd County, Ind., recently announced plans to drop the hours of part-time government workers to below 30 hours a week from 34 because of health-reform mandates. Butler County outside Wichita, Kansas, now classifies part-time municipal workers as those who work fewer than 30 hours a week. 
  • Long Beach, Calif., is restricting most of its 1,600 part-time employees to on average fewer than 27 hours a week. City executives warn that without the move, their budget would soar $2 million due to higher health benefit costs. The city calculated that the federal penalty for dropping coverage completely for its 4,100 full-time employees would have been about $8 million, so instead, it’s opting to cut the hours.

UNION OPPOSITION

  • The trend in school and government workers getting hours cut comes as the number of unions opposed to health reform grows. The list includes: The United Food and Commercial Workers International Union; International Brotherhood of Teamsters; International Brotherhood of Electrical Workers; International Union of Operating Engineers; United Union of Roofers, Waterproofers and Allied Workers; Sheet Metal Workers International Association; UNITE HERE; and Laborers International Union of North America.
  • Union leaders James Hoffa of the International Brotherhood of Teamsters, Joseph Hansen of The United Food and Commercial Workers International Union and D. Taylor of UNITE-HERE recently sent a letter to Reid and Pelosi warning: “The law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly,” adding, “the law as it stands will hurt millions of Americans including the members of our respective unions.”

*Modified from a Fox Business.com article

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Reminder: Under Obamacare the IRS Taxes Drug Companies For Selling Life Saving Medication

In June 2012, Obamacare was officially declared a big, fat tax and now, the IRS is moving forward with plans to tax pretty much everything it can. Articles have been written extensively about the job and innovation killing medical device tax, but according to a GAO report, the IRS has the authority to tax drug companies for the number of life saving medications it sells. As a result, drug prices go up and costs are passed onto patients who need those medications.

Established annual fee on manufacturers and importers of branded prescription drugs.

  • The report notes this tax was established in 2011, which explains recent increases in the cost of medication. A new analysis from HealthPocket of early health insurance rate filings finds that consumers who choose the lower cost Bronze Plans and Silver Plans under the Affordable Care Act (aka “Obamacare”) will likely be paying more for prescription drugs than they do now. Compared to comparable existing individual and family plan copays and coinsurance costs, consumers with prescription drug coverage can expect to pay an average of 34 percent more out of pocket for these medications if trends continue.

“About 70 percent of Americans use prescription drugs, and they are going to need to pay very, very close attention to what plans offer to minimize out-of-pocket increases for medications,” said Kev Coleman, head of Research & Data at HealthPocket and author of the study. “When it comes to drug costs and changes in our newly reformed health care system, the fine print really matters.”

*Modified from a Townhall.com

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Look out below! Work more, get less in Obamacare ‘cliff’

Be careful you don’t fall off the Obamacare “cliff” when the boss asks you to put in some overtime. Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money.

  • “Working more can actually leave you worse off,” “It’s sort of an absurd scenario,” said Jonathan Wu, ValuePenguin.com’s co-founder. “It’s something for people to be aware of.”
  • In that scenario, an individual or family whose annual income surpasses maximums set by the federal government—if only by $1—will totally lose subsidies available to buy health insurance under the Affordable Care Act. The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, Wu said. And they then would have to work significantly more to make up for the lost subsidy.
  • “I think they’d be surprised to see how drastic it is,” said Wu. “I’d be kind of shocked to see if I make $100 less (in total income each year), I get all these benefits, but if I make $100 more, I get nothing.” “You basically don’t want to fall in that hole,” said Wu, adding that he believed contractors and others with more control over their incomes would be apt to adjust their hours worked to avoid the subsidy cliff.

Under the ACA, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on those exchanges Oct. 1. The subsidies are available to people or families whose incomes total 400 percent above the federal poverty level or less, and are designed to cap their insurance premiums at 9.5 percent of their total income.

Doing the math

  • For a single person, that FPL income maximum is $45,960 per year. The maximums are adjusted upward for couples and families until maxing out at $94,200 for a family of four. Under a scenario that ValuePenguin.com identified, a couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan—a moderately priced level of benefits under the ACA’s scheme—that costs $9,346 annually if they made up to $62,040 per year.
  • But if they made just $1 more than that, they would lose the subsidy. Wu noted that the couple then would have to earn at least $65,492 to make up for the lost subsidy.

In New York, a family of three whose annual income totals $78,120, would pay $12,784 for the second-lower-priced silver plan on that state’s insurance exchange. After getting a $5,363 tax credit, the family’s net cost for the insurance would be $7,421. But if the family earned even slightly more than $78,120, they would have to pay the entire $12,784 for the insurance because they then wouldn’t qualify for the subsidy. To make up for that, the family’s annual income would have to reach $83,483, Wu said.

*Modified from a CNBC.com article

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Union Fears ‘Destructive Consequences’ From Obamacare

The laborers union has added to organized labor’s drumbeat of dissatisfaction with the Affordable Care Act.

  • In a letter sent to President Barack  Obama on Thursday, Laborers International Union of North America President Terry O’Sullivan wrote that the law has “destructive consequences” for the types of health plans that cover millions of unionized construction workers and their family members.
  • The letter follows a separate one written last week by the heads of the International Brotherhood of Teamsters, the United Food and Commercial Workers and Unite Here, expressing similar concerns to Congress’s top Democrats, Sen. Harry Reid and Rep. Nancy Pelosi. The International Brotherhood of Electrical Workers took out print ads raising alarms about the law last week as well.
  • Mr. O’Sullivan zeroed in on some factors that could directly impact unionized construction workers who are typically covered by multiemployer plans. He noted that costs are rising for such plans because of the law’s benefit mandates. Moreover, a tax under the law would cost such health plans $63 per covered individual, or $630,000 for a plan covering 10,000 people, he wrote. The proceeds of the tax will be used to subsidize insurance companies offering health plans in the Health Exchanges.
  •  “In effect, ACA takes money from the pockets of each laborer covered by a health and welfare fund and gives it to for-profit insurance companies,” Mr. O’Sullivan wrote. Those added costs will eventually impact collective bargaining agreements, he said, making union construction companies less competitive than nonunion ones and resulting in less work for union laborers. For those impacted, a great resource for CSCS Card Mock Tests is needed. The unions need to be strong to surpass such hurdles in these demanding times.
  • Mr. O’Sullivan concluded: “Approximately 3 million laborers, retirees, and their families now face the very real prospect of losing their health benefits. This, I must remind you, was something that you promised would not happen.”

The laborers union, with about 570,000 members, is one of a few major unions that didn’t support enactment of Affordable Care Act, Mr. O’Sullivan reminded Mr. Obama. “Now, we have watched as the implementation of the law has progressed, our fears have become reality,” he wrote.

*Modified from a WSJ.com article

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Price, Price, Price: Health-Insurance Shoppers Have Priorities

The federal health overhaul’s big requirement that most people carry health insurance is still months away, but already insurers like Blue Cross & Blue Shield have a sense of what will matter most to consumers: price.

  • “To me, it’s all about money,” said Rob Roy, who compared plans in a consumer test for the insurer. Currently uninsured and working as a cook in a pub, Mr. Roy said he found the choices too expensive. He ended up opting for a competitor’s plan instead of Blue Cross.

To figure out who’s going to show up for the new marketplaces and what they want, companies have plunged into research. They have been setting up simulated exchanges for consumers to test-drive. WellPoint Inc., the insurer that may end up with the biggest presence on the exchanges nationally, has put about 55,000 people through these faux exchanges.

“You’re going to try to have a population of individuals who have never purchased this product,” said Raymond Smithberger, who oversees individual health plans at Cigna Corp. “It’s like buying a brand-new car if you’ve never driven before.” Cigna used the online simulations to help decide which state exchanges it would join, and to shape some elements of its coverage design.

  • Simulations by firms like Stonegate Advisors LLC, which conducted the insurer’s test-drive, have found that consumers often choose plans fairly quickly, without always looking in-depth at the benefit details. People with more health problems wanted richer coverage so they wouldn’t have to pay much to go to the hospital or doctor’s office.
  • Still, the focus on price, including the effect of subsidies, is a constant. Consulting firm Booz & Co.’s pretend exchanges showed that premiums were the most important factor in plan selection, followed by cost-sharing features like deductibles. McKinsey & Co., which tested about 150,000 consumers, found most would opt for smaller arrays of doctors and hospitals to achieve discounts.
  • “People were willing to trade off network access for price,” said Shubham Singhal, a McKinsey director who leads the firm’s health-care practice.
  • Blue Cross found the monthly premium was the most important thing for 48% of people, and one of the most important things for another 26%. It dwarfed other factors like prescription-drug coverage and copayments for doctor visits.
  • Blue Cross sponsored the simulated exchange last fall to get “a real-life glimpse into how people will behave,” said Jim Gallagher, the insurer’s vice president of marketing. The company tested around 500 people, but it struggled to enlist Hispanics, a key demographic; only four completed a Spanish-language version of the simulation.
  • On average, people spent just nine minutes on the process. And less than a third tried to access the definitions of key terms like “deductible.” That may raise concerns that they didn’t fully understand details of the plans, and insurers will need to help educate them, said Marc Pierce, president of Stonegate Advisors.
  • “I found it very difficult to compare the different options,” said Elise Loftis, who said she would want to seek advice from an agent. She wanted to know what the plans would cover in hospital costs. Her husband has had his hips replaced, which resulted in an infection and a second hospital stay, and the couple has a 3-year-old son. She chose a Blue Cross plan in the test.
  • The research is shaping Blue Cross’s decisions. The company is initially selling a “tiered” plan that requires consumers to pay more to see certain health-care providers, and next year it will roll out a new design with a smaller network, both approaches that can hold costs down.
  • As in the real exchanges, people had to enter income information to learn what federal subsidy they might get. Then they were shown tiers of plans, ranked as bronze through platinum, with platinum the richest and most expensive. They could also choose from three different insurers, and click to figure out details like deductibles.
  • Forty-one percent of the consumers said they would sacrifice a broad choice of doctors and hospitals in order to save money, even if their own doctor might not be in the plan’s network. Overall, Blue Cross plans were chosen by nearly 60%.
  • The insurer also isn’t offering any platinum plans to consumers, partly because the simulation showed they tended to draw people with significant health needs, a particular concern if it’s the only competitor with a platinum product.

A new, broad Blue Cross marketing campaign boasts of features it hopes will be inviting to consumers, like doctor ratings. Another ad focuses on the idea that consumers can get a refund the following year if they don’t use enough services to get through their deductibles—a design that tends to reward healthier people as well as encourage people to stick with Blue Cross.

*Modified from a WSJ.com article

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Why The White House Is Panicking About ObamaCare

Actors. Actresses. NFL football players. Baseball players. Librarians. Mayors. City councilmen. Members of AARP. The Obama administration is looking far and wide, leaving no stone unturned in a relentless search for…well…for help. Help with what? Help with getting people to enroll in health insurance plans this fall. And why is that?

Because the administration is facing the very real possibility that its signature piece of legislation may fall flat on its face.

  • Last week’s announcement that the employer mandate will be delayed for a year and that income verification for people getting subsidies will also be delayed are the latest signs of trouble. The next shoe to drop may be the failure for people to obtain (ObamaCare) insurance — even if it’s free or highly subsidized.

Consider this:

  • About one in every four individuals who are eligible for Medicaid in this country has not bothered to enroll.
  • About one in five employees who are offered employer-provided health insurance turns it down; among workers under 30 years of age, the refusal rate is almost one in three.
  • Millions of people are turning down (Medicaid) health insurance, even though it’s free! Millions of others are turning down their employers’ offers. Since employees pay about 27% of the cost of their health insurance, on the average, millions of workers are passing up the opportunity to buy health insurance for 27 cents on the dollar.
  • You almost never read statistics like these in the mainstream media. Why? Because they completely undermine health policy orthodoxy: the belief that health insurance (even Medicaid) is economically very valuable, that it improves health and saves lives, and that the main reason why people don’t have it is that they can’t afford it.

Welcome to the huge disconnect in health reform. On the one hand there are the people who are supposed to benefit from health reform. On the other hand there are the people who talk about it and write about it. I think it’s fair to say these two groups almost never meet.

Study after study has purported to have found that health insurance improves health, saves lives, makes people happier, etc., etc. But these studies almost always ignore two cardinal facts:

  • We have made it increasingly easy in this country for the uninsured to obtain health care after they get sick. We have also made it increasingly easy for people to get health insurance after they get sick. Both developments reduce the incentive to spend time and money enrolling in a health plan.

I have described before the experience of emergency room care in Dallas:

“At Parkland Memorial Hospital both uninsured and Medicaid patients enter the same emergency room door and see the same doctors. The hospital rooms are the same, the beds are the same and the care is the same. As a result, patients have no reason to fill out the lengthy forms and answer the intrusive questions that Medicaid enrollment so often requires. At Children’s Medical Center, next door to Parkland, a similar exercise takes place. Medicaid, CHIP and uninsured children all enter the same emergency room door; they all see the same doctors and receive the same care.

Interestingly, at both institutions, paid staffers make a heroic effort to enroll people in public programs ― working patient by patient, family by family right there in the emergency room. Yet they apparently fail more than half the time! After patients are admitted, staffers go from room to room, continuing with this bureaucratic exercise. But even among those in hospital beds, the failure-to-enroll rate is significant.

Clearly, Medicaid enrollment is important to hospital administrators. It determines how they get paid. Enrollment may also be important to different sets of taxpayers. It means federal taxpayers pay more and Dallas County taxpayers pay less. But aside from the administrative, accounting and financial issues, is there any social reason we should care?

Economics teaches that people reveal these preferences through their actions. If people act as though they are indifferent between being uninsured and being on Medicaid, we may infer ― based on this behavior ― they are equally well off in both states of the world from their own point of view.”

Against this conclusion, advocates of “behavioral economics” might argue that people don’t know what’s best for them. They have to be “nudged.” Seeing a football star on TV encouraging young men to enroll in a health plan might do the trick. But for the Obama administration that doesn’t solve the problem. People need more than an initial nudge. They have to be nudged every month.

Take Massachusetts. That state cut its uninsurance rate in half. But the main vehicle was Section 125 plans set up by employers. These accounts allow employees to pay their share of the premiums with pre-tax dollars and they are mandatory. Further, for lower-income employees the insurance is highly subsidized by the state. More to the point, under this arrangement, the employee’s contribution is automatically deducted every pay period.

  • Under ObamaCare, similarly situated individuals are going to be expected to pay a monthly premium the way they pay their utility bills. But with this difference. When people don’t pay their electricity bills, the utility cuts off their electricity. When they don’t play their rent, the landlord throws them out in the street. But when they don’t pay their health insurance premium, what happens then? Not much.
  • Why is it so important to the administration to have people enroll? If they don’t enroll in Medicaid, I don’t think it matters very much. But if they don’t enroll in private plans sold in health insurance exchanges, it will matter a great deal. Remember, these will be artificial markets in which insurance will be underpriced to the sick and overpriced to the healthy. A lengthy, complicated enrollment process will further discourage those with no health problems.
  • But if the only people who enroll are those who are sick, the average premium will go through the roof. A death spiral will ensue as ever increasing premiums price more and more buyers out of the market, leaving only those whose expected medical expenses exceed those high premiums.

The bright side of all this is a possible teaching moment. The whole nation may be treated to one vast demonstration of why prices matter.

*Modified from a Forbes article

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Another union decries Obamacare’s impact on members’ healthcare coverage

Another union is crying foul over what it says is Obamacare’s negative impact on its members’ current healthcare coverage under multi-employer plans.

“If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what,” the International Brotherhood of Electrical Workers (IBEW) quotes a speech President Obama delivered on July 16, 2009 in new ads running in Roll Call and The Hill.

  • According to the union, the multi-employer plans IBEW has used for over 65 years to provide coverage for their members are at risk, thanks to what it terms “loopholes in the Affordable Care Act.”
  • “The ACA threatens the viability of multi-employer health plans in four ways: 1) the high employee threshold of the employer mandate 2) the re-insurance fee, 3) the definition of qualified health plans, and 4) the lack of multi-employer specific administrative guidance. We believe it may be impossible to reverse the damage done to these plans if these issues are not resolved.

The IBEW cannot afford to sit on the sidelines at the ACA threatens to harm our members by dismantling multi-employer plans,” the IBEW explains in a statement released Thursday.

The union estimates Obamacare could negatively affect the multi-employer health plans of some 26 million Americans. According to IBEW president Edwin D. Hill, however, the union remains a supporter of Obamacare’s mission — but the administration must make concessions for these plans.

“[Our] members and allied employers have worked hard for the healthcare they have, and President Obama must move now to guarantee that his signature law will not cost them their coverage,” Hill said in a statement.

IBEW is the latest union to voice concern about the coming impact of Obamacare implementation on their membership.

  • In recent months unions like the United Food and Commercial Workers International Union, The International Brotherhood of Teamsters and UNITE HERE have all been looking for alterations to the law.

UFCW president Joseph Hansen called on Obama in May to help his members keep their original coverage by extending tax subsidies to the plans.

“The ACA offers a subsidy to lower-income individuals and families so they can afford to purchase this insurance. As many of our members fall into this category, we believe the subsidy can and should apply to nonprofit plans. All we want is equality — where our plans are treated the same as for-profit insurers,” Hansen wrote in an op-ed at The Hill.

  • In April, United Union of Roofers, Waterproofers and Allied Workers called for “for repeal or complete reform of the Affordable Care Act” in order to protect such plans.
  • “For decades, our multi-employer health and welfare plans have provided the necessary medical coverage for our members and their families to protect them in times of illness and medical needs. This collaboration between labor and management has been a model of success that should be emulated rather than ignored. I refuse to remain silent, or idly watch as the ACA destroys those protections,” United Union of Roofers, Waterproofers and Allied Workers president Kinsey M. Robinson said in a statement.

*Modified from a DailyCaller.com article

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Delay in Obamacare – what you need to know

The Obamacare employer mandate has been delayed by a year to 2015, meaning that many businesses can push back providing worker health insurance a bit longer. That changed on Tuesday. In a blog post, the U.S. Treasury Department explained that the government needs time to simplify reporting requirements, and businesses need breathing room to adapt to the changes.

Here’s what businesses and workers need to know.

Who’s affected?

A relatively small share of the country’s businesses fall under Obamacare’s employer rules, and most of those that do already provide insurance. That might sound surprising, because the biggest Obamacare myth spouted by opponents is that it will crush small business. The vast majority of the nation’s businesses, 97% of them, are too small to be affected.

What’s more, most larger employers already provide insurance anyway. Of the nation’s 6.5 million workplaces, only about 70,000 — a little more than 1% — must actually start providing insurance.

Then why does this matter?

The mandate affects most of the nation’s workers. According to the latest Census data, close to 80 million people work at firms that must provide insurance. Though most of them are offered insurance, that still leaves millions who will have to wait another year.

Has the mandate already affected businesses?

It has impacted those businesses that intend to dodge Obamacare by cutting worker hours. The employer mandate kicks in at 50 full-timers, and the law counts anyone who works at least 30 hours a week as full-time.

  • That’s given rise to the “29ers” phenomenon, in which business owners reduce workers’ hours from full-time to 29 hours per week. This has been especially prevalent in the franchising and restaurant industries, where shift hours are frequently swapped.

There’s no telling whether the mandate has already impacted hiring, though. Mark Zandi, chief economist at Moody’s Analytics, said hiring data has yet to show significant changes as a result of Obamacare.

What about the rest of Obamacare?

The Treasury said the latest change doesn’t affect the individual mandate, which requires that most taxpayers buy insurance or pay a government fine. In similar fashion, Treasury said the timeline hasn’t changed for the implementation of individual and small business exchanges — separate marketplaces where people and business owners can shop for insurance at the state level.

But there are doubts.

As originally planned, only those who don’t receive affordable coverage at work can receive federal subsidies while shopping for insurance on the individual exchanges. But now that employers don’t have to abide by Obamacare reporting requirements, which means the government will have no way to verify whether someone is incorrectly getting subsidies.

*Modified from a CNNMoney.com article

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For Fatburger and others, Obamacare delay came too late

Delaying the Obamacare employer mandate has simply put off rules business had already started adjusting to. Under the Affordable Care Act, companies with 50-plus full-time employees must start offering them health insurance or face stiff penalties. The employer mandate had been set to kick in January 2014, but was pushed back a year.

  • Many companies at the International Franchise Expo in New York City last month acknowledged they’ve been adopting that slash-and-share method, cutting hours and splitting workers.
  • The employer mandate remains unpopular with most small business owners. Although it applies to only 3% of the nation’s 5.7 million employers, the vast majority of whom already provide insurance, the rule is seen as burdensome and confusing.
  • Because a 30-hour work week counts as full-time under Obamacare, Fatburger fast-food restaurants had started cutting worker hours below that threshold, CEO Andy Wiederhorn said. Some Fatburger owners even began “job sharing” with other businesses, teaming up to share a higher number of employees all working fewer hours. Someone could work 25 hours at one Fatburger, 25 at another one with a different franchise owner, and still not be a full-time worker under Obamacare rules.

For them, the White House decision to delay implementation doesn’t change much: Small business owners who undo those changes will simply have to redo them next year.

“All it’s doing is causing confusion, anxiety and the workers are paying the price,” Wiederhorn said. “Now, the mandate’s a moving target. It’s very, very challenging.” At Wiederhorn’s second company, Buffalo’s Cafe chicken wing restaurants, he had already given up $30,000 as a result of the employer mandate.

  • One owner of several Buffalo’s Cafe franchises in Georgia planned to close one of his restaurants to get below the 50-employee mark. In response, Wiederhorn reduced the royalty fee his corporation charges franchisees.

Wiederhorn could have waited a year before making the move. “I’m definitely getting the short end of the stick,” he said. “We gave them the concession to save the jobs. And now the law’s been delayed. We feel like we have whiplash here.”

  • Mike Johnson is another Buffalo’s Cafe franchisee who owns four restaurants near Atlanta, Ga. He has no plans to reduce workers’ hours to avoid the mandate. Those covered under his insurance plan will jump from 12 employees to perhaps 70.
  • Even if some of them turn down the offer, he projects his yearly health insurance premiums will go from $60,000 to more than $200,000. That would cut his profits in half, he said.

“I’ve been worried nearly sick about it,” Johnson said. “This gives me another year to look at all the options, and lets the politicians talk about what the best course of action would be.”

Johnson hopes that includes a repeal of the employer mandate. He argues that health care reform will be sufficient enough with the other provisions.

“The employer mandate never made any sense to anybody, especially to struggling small businesses,” he said

*Modified from a CNNMoney.com article

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