Latest ObamaCare Delay May Curb Cuts In Hours

Investor's Business Daily

The Obama administration blamed complexity and technical hurdles when it delayed the employer health insurance mandate last July. The second delay announced Monday was about easing the law's impact on employers and their workers.

It's also likely to ease some political headaches for Democrats, who won't have to see nearly as many headlines in 2014 about employers cutting work hours due to ObamaCare.

The latest changes to the controversial employer mandate amount to a far-reaching, but temporary, revision of the law by administrative action.

The mandate's exemption for employers with up to 49 full-time-equivalent workers will be extended to those with up to 99 employees for 2015.

David Owens, who owns Creek Ratz and Capt. Dave's Dockside restaurants in South Carolina, had told his employees that most would have their hours cut to 28 per week starting March 1.

With as few as 65 full-time equivalent employees during the slow season, Owens said he now won't have to cut hours — at least until next year.

"They keep moving the goal post," Owens said.

Offering coverage to all of his employees could have run about $240,000 a year, turning his finances "upside down.

While Owens is relieved, he still feels "the fear of uncertainty.

A second major change will greatly weaken the law's requirement that large employers offer coverage to virtually all of their full-time workers — or face a fine of about $2,000 per employee.

This provision is likely to make a difference for public-sector employers that already offer generous benefits but have a substantial slice of workers who don't get health coverage.

IBD has compiled a list of 401 employers who have cut work hours due to ObamaCare's employer mandate, and more than 300 are in the public sector — including more than 120 school districts. Aides for special-needs students, bus drivers and cafeteria workers in these districts have seen work hours cut below the 30 per week that ObamaCare defines as full-time.

Utah's Alpine School District, for example, said it faced a $4.2 million cost to insure workers classified as part-time who worked more than 30 hours.

Due to the rule requiring coverage for 95% of full-timers, many public employers couldn't simply choose to pay a penalty for any workers who get ObamaCare subsidies.

Under the mandate, the tax penalty owed by an employer could dramatically exceed the amount of subsidies its workers receive from the exchanges. Indiana is challenging the employer mandate as an unconstitutional tax on sovereign states.

The new IRS regulations also provide more clarity and a degree of relief on a couple of other trouble spots. Seasonal workers, who work no more than six months in a year, won't be considered full-time, no matter their hours.

Many colleges and universities had cut teaching loads to nine credit hours — two hours of preparation time for every hour of instruction — to keep adjunct faculty under the 30-hour equivalent. But the IRS said they could count as little as 1.25 prep hours for every class hour, which should allow colleges to give adjuncts an extra class before the insurance mandate applies.

It's not clear how far the temporary administrative fixes will go in relieving the burden for large employers with a primarily modest-wage workforce.

IBD's list includes big private employers like Staples (SPLS), David's Bridal, Bealls Department Stores, Dave & Buster's, K-VA-T Food Stores, Regal Entertainment (RGC), AAA Parking and many others.

Bureau of Labor Statistics data show that the workweek has been shrinking in many of the same sectors where anecdotes of hourly cuts have piled up.

Low-wage workers clocked the shortest workweek on record in December, an IBD analysis finds. That group includes 30 million workers in private industries where pay for nonsupervisors averages up to about $14.50 an hour.

Another apparent result of the employer mandate delay is to give momentum to a GOP-led push to suspend ObamaCare's individual mandate tax penalty for 2014. The administration late last year said Americans with canceled policies don't have to get coverage in 2014.

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