Health Law Could Penalize Small Businesses With Part-Timers
The new health law is supposed to encourage employers to provide health insurance to their workers. But when it comes to health coverage for part-time workers, there's no penalty on companies that skip it.
But that doesn't mean the bosses of part-timers can rest easy. Small companies will need to keep a close eye on how many part-timers they employ or may face hassles they hadn't bargained for.
Here's why. The new law says that starting in 2014 employers have to offer affordable health coverage to their full-time workers or pay a penalty of up to $3,000 each.
But small businesses with 50 or fewer workers are exempt from those penalties. There is a catch, though. The 50-worker total is a combination of both full-time and "full-time equivalent" workers, a figure that's arrived at by adding up part- timers' hours. In this case, 120 part-time hours per month equals one FTE, no matter how many employees are working those 120 hours.
So small businesses that employ mostly part-timers -- retailers, for example, or restaurants -- run the risk of passing the 50-employee threshold and putting themselves at risk for owing health insurance penalties on their full-time workers.
Ken Weinstein is very aware of that magic 50 number. The owner of the Trolley Car Diner in Philadelphia recently opened another restaurant, the Trolley Car Café, also in Philly. Between the two, he employs 75 full- and part-time staff that together total 41 full-time employees. Weinstein says that if he decides to open another restaurant, he'd consider opening it under a different corporate name to avoid exceeding the 50-person threshold.
Weinstein supports the new law. But he says he'd be at a competitive disadvantage if he were subject to the requirements placed on large employers.
He now offers health insurance to his salaried staff; hourly workers can sign up for a "specified medical event" policy that pays a cash benefit if they have a heart attack, for example.
Once the health insurance exchanges open in 2014, he says he'd like to make a contribution to help his part-time workers buy coverage there. But offering them comprehensive health insurance on the job is not in the cards. "Everyone has a basic right to health care coverage, and we'd love to be able to provide it," he says. "But it's just not affordable."
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