Employers With Part-Time Workers Face Challenges Under PPACA

Taking Action  

Mercer asked employers that do not currently offer coverage to employees working 30 or more hours a week about their likely response to PPACA’s requirements.

•  51% said they plan to change their workplace strategy so that fewer employees work 30 or more hours a week;
•  27% said they plan to offer a lower-cost plan for newly eligible hourly employees;
•  24% said they plan to make all employees eligible for the full-time employee plans;
•  17% said they will offer the full-time employee plans to some, but not all, newly eligible employees;
•  8% said they will pay the shared responsibility penalty; and
•  only 3% said they will terminate medical coverage for all employees after the insurance exchanges become available.

Employers planning to change their workplace strategy so that fewer employees are eligible must keep in mind that employee performance and productivity can be affected by moving workers from full-time to part-time status, said John Derse, senior partner at Mercer.

Stefan Gaertner, principal at Mercer, said he and Derse studied the productivity loss of a company that reduced its full-time staff and found that although it “saved” $5 million in compensation and benefits by increasing part-time employment, it lost $30 million in productivity. According to Gaertner, “This is a cautionary tale.”

When choosing a strategy, employers should create scenarios and play them out, considering the cost and how it would affect employees and the company overall, he said.

Corie Russell
editors@plansponsor.com