Lots of part-time employees? ACA may hit you hardest

A new study on the healthcare reform law could mean bad news for businesses that employ mostly part-time and/or low-paid employees.

Mercer, the HR consulting firm that conducted the study, surveyed 1,203 employers and found that 60% expect some type of increase in cost. But it appears that those with the largest amount of part-time workers — retail and hospitality — will be hit the hardest.

Nearly half of retail and hospitality employers expect the Affordable Care Act (ACA) to increase costs by 3% in 2014.  Forty percent of employers in the healthcare industry expect an increase of that size as well.

Why the worry?

The reason employers with mostly part-time employees are expecting to be hit hardest is because of one of the major provisions of the ACA that forces employers to extend coverage to all employees working 30+ hours per week or face penalties.

Sharon Cunninghis, leader of Mercer’s US Employee Health and Benefits, said a 3% increase will be very tough for employers to absorb when factoring in that health benefit costs are already rising at twice the rate of general inflation.

According to the survey, 67% of retail and hospitality employers said they’re more inclined to change their workforce strategy so that fewer employees meet the 30+ hours threshold. But, conversely, employers surveyed in areas that don’t see many part-timers, like manufacturing, would be more likely to make their part-time employees eligible for their insurance plan or offer a cheap alternative.

Additional findings: Many behind schedule

• The 56% waiting to develop a strategy until the Supreme Court decision are most likely moving forward with changes now, while 11% are still waiting until after the November elections.
  
• In the short-term, employers need to produce and distribute summaries of benefits and coverage and 36% of respondents say they haven’t yet begun or are behind schedule.
• 6% of survey respondents believe it’s likely they will drop their medical plans after the public insurance exchanges come online. This rises to 9% among retail and hospitality employers.