Archive | State Health Exchanges

Exchange Conflicts Come Into Sharper Focus

The polarizing effects of the Affordable Care Act have become even sharper since the launch of public health insurance purchasing exchanges on Oct. 1.

Those effects were highlighted by a panel of experts convened by Employee Benefit News for a web seminar titled, “It’s Oct. 2, Now What? Catching Up on ACA Implementation.”

  • Some of the conflicts center around the search for evidence that public exchange rates present either a great bargain for individuals, or no savings at all. However, explorers have found wide rate variations not only from state to state, but within state. For example, a 35 year-old male nonsmoker from Massachusetts shopping for an entry-level Bronze Plan was found to have options ranging from $192.66 a month to $375.83. Nearby Connecticut, in comparison, had premiums start higher for this applicant profile but cap at a lower ceiling with a premium range of $241.85 to $299.93.
  • Moreover, anyone attempting to gauge what kind of bargains are available through the exchanges should ensure they are making like comparisons, according to web seminar panelist Rodger Bayne, president of Benefit Indemnity Corporation. “Quotes might be cheaper because of the Bronze rates, with lower premiums but higher out-of-pocket costs,” he observed. “Certainly there will be some disputed claims and concerns about what’s best.”
  • Other envisioned conflicts stem from lack of employer compliance with employee notification requirements. These could arise if, for example, an employee without coverage receives medical treatment from a provider who might then be on the hook for uncompensated care. If that provider discovers the employee was not properly notified about the exchanges and his coverage options, there could be the makings of a lawsuit.
  • “We believe that, over time, providers holding bad debt will join with employees and that this will become a civil court issue,” according to Randy Spicer, health services consultant for the National Restaurant Association. To help members comply with ACA notifications and avoid such liability, the association has created an online Compliance Portal which assists with notification delivery and recordkeeping. The group is also exploring whether to make the Portal available to non-member organizations.
  • On other fronts, attorney Anusha Rasalingam, a partner with Friedman & Wolf, notes that Obama administration rulings on ACA implementation have alienated labor unions. At issue is the status of multiemployer plans as qualified health plans on the exchanges. However, efforts to have multiemployer plans included in the exchanges were rejected last month by the Labor Department and Department of Health and Human Services.

*Modified from a Benefitnews.com article

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What Does New Health Law Mean For Me?

Beginning today October 1st, individuals will begin selecting health insurance plans that will become effective January 1, 2014. These are some questions and answers to clarify the process. 

I already have health coverage at my job. What happens to me?

  • Changes may not affect you much if you’re one of the 171 million Americans with coverage through your job or your spouse’s job. You might be able to use new health-insurance exchanges opening Tuesday, but you probably wouldn’t be eligible for a subsidy.

I heard some companies that offer health coverage are making changes—is that true?

  • Yes. The law already mandates allowing people to keep children on their plans up to age 26. Plans with very limited benefits offered by some companies—particularly in retail, restaurants and agriculture—are generally being phased out. A few firms are giving workers a fixed sum and letting them choose their own plan from what’s called a private exchange. This isn’t the same as the health law’s exchange.

I’ve been buying my own health coverage. What now?

  • On Tuesday, you’ll see new private insurance plans through insurance exchanges in most parts of the country. Singles making less than $46,000 a year, couples making less than $62,000 and families with slightly higher income levels may be eligible for subsidies to pay for coverage.

What kinds of policies are they selling on these exchanges?

  • Policies must cover certain preventive care and can’t have lifetime caps. Also, your premium won’t be based on your medical history—good news if you’ve been sick. Healthy people who previously could buy inexpensive policies may pay more. Plans are labeled gold, silver or bronze depending on how much they cover.

Do I get to keep my doctor?

  • If you’re buying a new policy on an exchange or switching insurers, you’ll likely find they have different networks of providers. Some of the lowest-priced policies are likely to have smaller networks.

What if I’ve been going without coverage?

  • Some of the 46 million uninsured Americans may be subject to a penalty starting at $95 next year if they don’t have coverage starting Jan. 1. You can go to the new insurance exchanges to shop for plans, or if your income is below 138% of the federal poverty level, you may qualify for Medicaid, depending on your state.

Those of us on Medicare?

  • If you’re one of 49 million in the Medicare program, with or without a supplemental insurance plan, you’ll continue to enroll the same way. The law cuts spending by billions of dollars over a decade—largely by reducing payments to hospitals and doctors and increasing incentives for more-efficient care—but it doesn’t directly affect benefits. Supporters say this will strengthen Medicare. Opponents say seniors will find it harder to access their benefits if providers are squeezed.

*Modified from a WSJ.com article

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Ten states where Obamacare wipes out existing health care plans

Here are the ten states where consumers may like their health care plans, but they won’t be able to keep them.

1) California: 58,000 will lose their plans under Obamacare. The first bomb dropped in California with a mass exodus from the most populated state’s Obamacare exchange. Aetna, the country’s largest insurer, left first in July and was closely followed by UnitedHealth. Anthem Blue Cross pulled out of California’s Obamacare exchange for small businesses as well. *Fifty-four percent of Californians expect to lose their coverage, according to an August poll.

2) Missouri: Patients of the state’s largest hospital system — which spans 13 hospitals including the St. Louis Children’s Hospital — will not be covered by the largest insurer on Obamacare exchanges, Anthem BlueCross BlueShield. Anthem covers 79,000 patients in Missouri who may seek subsidies on Obamacare exchanges, but won’t be able to see any doctors in the BJC HealthCare system.

3) Connecticut: Aetna, the third largest insurer in the nation, won’t offer insurance on the Obamacare exchange in its own home state, where it was founded in 1850. The reason? “We believe the modification to the rates filed by Aetna will not allow us to collect enough premiums to cover the cost of the plans and meet the service expectations of our customers,” said Aetna spokesman Susan Millerick.

4) Maryland: 13,000 individuals covered by Aetna and its recently-purchased Coventry Health Care won’t be able to keep their insurance plans if they want Obamacare subsidies on the exchanges. Aetna and Coventry canceled plans to offer insurance in the exchange when state officials wouldn’t allow them to charge premiums high enough to cover costs.

5) South Carolina: 28,000 people were insured by Medical Mutual of Ohio, SC’s second-largest insurance company, until it decided to leave the state entirely in July due to Obamacare’s “vast and quite complex” new regulations. Company spokesman Ed Byers said Medical Mutual’s patients would be switched over to United Healthcare plans instead.

6) New York: Aetna pulled out of New York’s exchange in late August in an effort to keep their plans “financially viable,” said Aetna spokeswoman Cynthia Michener.

7) New Jersey: 1.1 million Aetna customers are at risk in New Jersey, where the leading insurer also won’t be a part of the exchange. Just 2,600 patients purchase individual plans with the company, but any looking to take advantage of subsidies on the exchange for unaffordable employer-based insurance won’t be able to do with Aetna.

8) Iowa: Wellmark Blue Cross and Blue Shield, Iowa’s largest health insurer, decided not to offer plans in the Obamacare exchange. It sells 86 percent of Iowa’s individual health insurance plans.

9) Wisconsin: Two of the three largest insurers in the state won’t offer plans on the exchange. United Healthcare and Humana patients will have to get a new health insurer to buy insurance on Obamacare exchanges.

10) Georgia: Just five insurers are participating in Georgia’s Obamacare exchange. Medical Mutual of Ohio left Georgia and Indiana as well as South Carolina, due to Obamacare regulations. Aetna, along with Coventry, also decided against participating in the George health exchange.

*Modified from a DailyCaller.com article

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Insurers limiting doctors, hospitals in health insurance market

THE DOCTOR CAN’T SEE YOU NOW! In recent months, the top priority for state officials and insurers has been affordable premiums. A smaller panel of doctors and hospitals generally yields lower rates because insurers can negotiate better discounts. Insurers in California’s new health insurance exchange are holding down premiums by limiting choices, raising concerns that patients will struggle to get care.

  • Major insurers have limited the number of doctors and hospitals available in California’s new health insurance market. Cedars-Sinai Medical Center, for example, is available only on two lower-priced Health Net plans in the state-run market. To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state’s new health insurance market opening Oct. 1.
  • New data reveal the extent of those cuts in California, a crucial test bed for the federal healthcare law. These diminished medical networks are fueling growing concerns that many patients will still struggle to get care despite the nation’s biggest healthcare expansion in half a century. Consumers could see long wait times, a scarcity of specialists and loss of a longtime doctor. “These narrow networks won’t work because they cut off access for patients,” said Dr. Richard Baker, executive director of the Urban Health Institute at Charles Drew University of Medicine and Science in Los Angeles.
  • To see the challenges awaiting some consumers, consider Woodland Hills-based insurer Health Net Inc. Across Southern California the company has the lowest rates, with monthly premiums as much as $100 cheaper than the closest competitor in some cases. That will make it a popular choice among some of the 1.4 million Californians expected to purchase coverage in the state exchange next year.
  • But Health Net also has the fewest doctors, less than half what some other companies are offering in Southern California, according to a Times analysis of insurance data. In Los Angeles County, for instance, Health Net customers in the state exchange would be limited to 2,316 primary-care doctors and specialists. That’s less than a third of the doctors Health Net offers to workers on employer plans. In San Diego, there are only 204 primary-care doctors to serve Health Net patients.
  • Health Net says price will probably matter most to the uninsured and people who buy their own health insurance now, so it built a narrow network to serve those “value seekers.” “We have more than enough doctors for our projected enrollment through 2014, and we have time to adjust if it becomes necessary,” Health Net spokesman Brad Kieffer said. “We continue reaching out to providers, and we are bringing more on board.”
  • Other major insurers have pared their list of medical providers too, but not to Health Net’s degree. Statewide, Blue Shield of California says exchange customers will be restricted to about 50% of its regular physician network. In response, California officials have been pressing Health Net and other insurers to add more doctors since companies filed their initial rosters in May. The state exchange, Covered California, says it will monitor enrollment closely once it begins next month and it’s prepared to step in if problems arise.
  • Rather than mere head count, officials say they are scrutinizing what capacity physicians have to accept new patients. And to assist consumers, California will enable people to search for specific doctors online during enrollment to determine what, if any, health plans they will be part of in Covered California. “Does the doctor have room for one more patient or 40 patients? It’s about available seats,” Lee said. “We want to make sure every network has enough doctors.”
  • In recent months, the top priority for state officials and insurers has been affordable premiums. A smaller panel of doctors and hospitals generally yields lower rates because insurers can negotiate better discounts with providers who receive more patients.
  • Insurers and some consumer advocates think people are willing to trade some choice in order to pay less. More employers have been adopting these narrower networks in recent years to trim their own healthcare bills. The California Medical Assn., which represents more than 37,000 doctors statewide, thinks the state is underestimating the difficulties ahead.
  • The differences in network size are noticeable across Southern California. Health Net has 920 physicians in Orange County, compared with more than 2,500 for Blue Shield, according to company data. Health Net has fewer than 800 doctors in San Diego County, while nearly 3,000 physicians are available in an Anthem Blue Cross plan.
  • In addition to doctors, some big-name hospitals may be left out. A spokesman for Cedars-Sinai Medical Center said the hospital has received many calls from patients who were worried about keeping their access to the hospital and its affiliated doctors in the new health plans next year. Cedars-Sinai is available only on two lower-priced Health Net plans in the state-run market, according to the hospital and insurer. Anthem Blue Cross says that it’s the only insurer that includes UCLA Medical Center and other UC facilities statewide.
  • Newly released data show the pricing power of these tighter networks. In Los Angeles County, Health Net is consistently the lowest-cost option for a mid-level Silver plan across various age groups. A family of four in Norwalk earning $65,000 annually would pay $384 a month for a Health Net policy, after taking into account a federal subsidy based on their income. For a policy with identical benefits, Blue Shield was next at $477 a month and Kaiser was the most expensive at $602.

*Modified from a LATimes.com article

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The Administration’s War on the Young: ACA Version

It’s not news at this point that the Affordable Care Act (ACA) is built around the perverse premise that younger, healthier people should spend more for their health insurance, to subsidize the cost of health insurance for older, sicker people.

  • A new study by the Kaiser Family Foundation, released this week, brings into the light the full extent of this wealth redistribution from young and healthy to old and sick. In fact, when individuals choose less generous plans in “Bronze Tier” a 60 year old could pay 1/3 of what a 25 year old with the same income would pay!

  • Much has been made about the three to one age band rating requirements for health insurance contained in the ACA. In English that means that an insurer cannot charge a sick 60 year old more than three times what they charge a healthy 25 year old. This can be seen clearly in the Kaiser study when one looks at the cost of a so-called “Silver plan” for a 60 year old, 40 year old and 25 year old who all have identical incomes at 250 percent of the poverty level.
  • In Los Angeles, CA for example the 60 year old would pay $541 per month before subsidies for the second lowest cost silver plan (which serves as the benchmark for calculating the subsidy), the 40 year old would pay $255 before subsidies, and the 25 year old would pay $200 before subsidies. Because all three are at 250 percent of poverty their out of pocket monthly cost is capped at $193 per month. Each receives a subsidy sufficient to bring their monthly premium down to the $193 cap.
  •  Now that their subsidy is set, each individual can choose to stick with the silver plan, move up to a gold plan, or move down to a bronze plan. This is where the president’s war on the young becomes strikingly clear. Whether these three individuals buy a gold, silver or bronze plan, their monthly subsidies stay the same – in the Los Angeles example $341 for the 60 year old, $62 for the 40 year old, and $7 for the 25 year old. If all three choose to buy the same bronze plan, the 60 year old would pay $50 a month, the 40 year old would pay $125 a month, and the 25 year old would pay $140 a month
  •  What that means is that those whose health care costs are the highest pays $90 LESS per month, than the individuals whose health care costs are non-existent. Of the eighteen states Kaiser examined, the largest discrepancy was in Connecticut where a healthy 25 year old would pay $117 a month for the same insurance that a 60 year old could get for FREE. The smallest margin – excluding New York and Vermont which have full community rating in effect – was in Portland, OR where the healthy 25 year old would pay $14 more for the same bronze plan than the more expensive to insure 60 year old.

Modified from an AmericanActionForum.com article.

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Analysis: Obamacare, tepid U.S. growth fuel part-time hiring

U.S. businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid. Faltering economic growth at home and abroad and concern that President Barack Obama’s signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say.

  • Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
  • This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services. Executives at several staffing firms told Reuters that the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.
  • “Us and other people are hiring part-time because we don’t know what the costs are going to be to hire full-time,” said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, New Jersey. “We are being cautious.” Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10 percent and 15 percent compared with last year.

CAUTIOUS STRATEGY

  • The delay in the Obamacare employer mandate “confused people even further,” said Bill Peppler, managing partner at Kavaliro, a technology staffing firm in Orlando, Florida. “When we talk to customers, I still don’t think anyone has a handle on this.” Obamacare appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment.
  • Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees, according to the staffing and payroll executives. Under Obamacare, any employee working 30 hours or more is considered full-time. An effort to trim hours might have helped push the average work week down to a six-month low in July. “As organizations and companies reduce the hours of part-time workers, they still have to replace the capacity, so they go out and hire additional part-time workers,” said Philip Noftsinger, president of CBIZ Payroll in Roanoke, Virginia, which manages payroll for more than 5,000 small businesses.

WEAK ECONOMY NOT HELPING

  • Obamacare is only one factor. The surge in part-time employment also reflects an economy that has struggled to maintain decent growth. That has left business owners such as Jason Holstine, who owns a building supply store in Baltimore, Maryland, reluctant to take on full-time staff. Holstine said he was more concerned about budget policy in Washington than about Obamacare, given that federal government furloughs tied to across-the-board spending cuts led some of his clients to put home renovations on hold. “We are still working in an environment that is very hard to forecast the near future and remains very cash-constrained,” said Holstine. “We were always nimble, but we had to become more reactive. Using part-timers gives us more flexibility.”
  • In a paper published last month, the San Francisco Federal Reserve Bank said uncertainty over fiscal and regulatory policy had left the U.S. unemployment rate 1.3 percentage points higher at the end of last year than it otherwise would have been. The jobless rate stood at 7.8 percent in December; it has since fallen to 7.4 percent.
  • “That’s about 2 million jobs below where we should have been in 2012 because of policy uncertainty,” said Keith Hall, a senior research fellow at George Mason University’s Mercatus Center in Arlington, Virginia. Economists and staffing companies are cautiously optimistic that part-time hiring and the low wages environment will fade away as the economy regains momentum, starting in the second half of this year and through 2014.
  • But businesses, accustomed to functioning with fewer workers, might not be in a hurry to change course. A study by financial analysis firm Sageworks found that profit per employee at privately held companies jumped to more than $18,000 in 2012 from about $14,000 in 2009. “Private employers are either able to make more money with fewer employees or have been able to make more money without hiring additional employees,” said Sageworks analyst Libby Bierman. “The lesson learned for businesses during the recession was to have lean operations.”

*Modified from a Reuters.com article

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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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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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