Most companies aren’t trimming workers’ hours for health care law
by francine knowles Staff Reporter September 6, 2013 9:30PM
Stephen Palmer, co-owner of Palmer Place Restaurant in LaGrange, oversees his lunchtime work crew, including Nichole Graziani of Melrose Park, as she carries a tray of food out of the kitchen at the establishment, Thursday, Sept. 5. 2013. | J.Geil/for Sun-Times Media
Updated: September 8, 2013 2:40AM
While some Chicago area employers have cut worker hours to avoid providing insurance under the new health care reform law, there are no signs of a mass effort by employers to do that, local business groups and benefits experts say.
And Chicago area employers are sticking with providing health insurance benefits and are not planning to send workers to the new Illinois Health Insurance Marketplace to get out of offering coverage, they note.
With key provisions of the Affordable Care Act kicking in Jan. 1, employers are determining what the law means for their bottom lines and workforce and deciding how to adhere to it, experts say.
“We’ve seen the vast majority of employers are committed to continuing to offer health care to their active employees and are doing what they need to do to make sure that they are compliant with the law,” said Hank Bereman, senior consultant and health and group benefits practice leader at Towers Watson in Chicago.
The law requires employers with 50 or more workers to offer coverage to full-time workers and defines full-time employees as those working 30 hours or more per week.
Employers who don’t comply had faced penalties beginning in 2014, but the Obama administration pushed that back until 2015.
The 30-hour rule presents challenges to retailers, who face potential significantly higher costs because they rely heavily on part-timers and seasonal workers and had been defining part-timers as those working less than 40 hours a week, industry representatives say.
Stephen Palmer, owner of Palmer Place Restaurant in LaGrange, said he reduced some workers’ hours to keep them below the 30-hour threshold because he can’t afford the higher costs he faces due to the law. Of the 128 employees working for him, 77 are full-time as defined by the law. If everybody who qualifies to get insurance opts to do so, it will cost $180,000 a year, some of that premium cost to be paid by workers, he said.
“I want everybody to have accessible health care,” he said. “But I sell cheeseburgers for a living. I’m not selling some $100 a plate dinners here. We have to make up that $180,000.”
Cutting workers’ hours is not a trend across the industry, says National Restaurant Association Executive Vice President Scott DeFife. But he expects restaurant workers will have less scheduling flexibility and that restaurants will go-slow on hiring full-time workers due to the law.
David Borris, owner of Hel’s Kitchen Catering in Northbrook, says he has no plans to cut workers’ hours. He employs 25 full-time workers and 80 part-timers. He has provided health care benefits since 1990, he said.
“It’s a point of attracting good talent,” he explained, adding his decisions on how to handle coverage have “always been driven as much by what’s good for my employees as it has been by what does it cost me.”
He was an advocate of the law and believes the lead up to implementation has reduced his premium increases.
“Our most recent renewal premium increase was in the 7 percent range,” compared to past hikes of 16 to 18 percent, he said.
With the law requiring individuals to purchase health insurance or face a penalty, more individuals are expected to sign up for employers’ plans, while others not eligible for their company-sponsored plan will shop for insurance at the new marketplace.
At the Illinois Health Insurance Marketplace, individuals and businesses with 50 or fewer employees will be able to buy insurance Oct. 1 for coverage beginning Jan. 1.
Small and mid-sized employers who provide health insurance now are taking a “wait and see approach” on the marketplace exchange, said Laura Minzer, executive director of the Illinois Chamber of Commerce’s Healthcare Council.
“We don’t know a lot about the exchange yet in terms of what health insurance options are going to look like there, how affordable are they going to be,” she said.
Employers will be cautious on shifting to the marketplace, said Mary Lynn Fayoumi, chief executive officer of the Downers Grove-based Management Association, because they understand not offering benefits directly “could have far reaching implications on their ability to attract and retain talent.”
Email: fknowles@suntimes.com
Twitter: @KnowlesFran
