The government of Middletown Township, N.J., has started to cut down hours of their part-time workers in order to avoid providing health insurance for the employees when the Affordable Care Act goes into effect; the township is just one of many employers cutting back on hours in an unexpected consequence of the health care reform law, according to the Asbury Park Press.
Under the new law employers will be required to provide health coverage for workers who work more than 30 hours per week or else they will face an annual fine between $2,000 and $3,000 per employee. Middletown changed the hours for 25 of their employees; providing health care for those employees could cost the township an additional $775,000 per year, according to the Asbury Park Press.
The employer mandate was scheduled to go into effect at the end of the year but has been delayed for one year in order to give businesses more time to prepare. Even with the law being delayed employers are cutting back on hours now because they don't know how far back the government will look when it decides if a company should be fined.
"Employers like us are still trying to figure out the ramifications," Township Administrator Anthony Mercantante told the Asbury Park Press. "I'd be shocked if other towns aren't doing the same thing."
The United Parcel Service, the fourth largest employer in the United States, announced that it would no longer offer health insurance to the working spouses of 15,000 workers. The package delivery service said that increased costs from the new law and the potential for spouses to find insurance elsewhere were the reason for the cut, according to Bloomberg.
"The feeling is drastic times call for drastic measures," Rich Fuerstenberg, a partner at the benefits consultant Mercer Inc., told Bloomberg. "What employers are adopting today are strategies that were considered crazy or out of the mainstream just a few years ago."
Another company that appears to be changing their employment policies based on the health care reform law is clothes retailer Forever 21. Many of the company's full time employees will be losing their benefits on Aug. 31 as the company limits them to working 29.5 hours per week, according to the Huffington Post.
