CBO Predicts Employees Will Reduce Hours to Obtain Health Insurance Subsidies

The Congressional Budget Office released a report that forecasts starting in 2017 workers the Affordable Care Act will “reduce the total number of hours worked – almost entirely because workers will choose to supply less labor”.

The health care reform law prevents employees that work for a company that offers affordable coverage from receiving subsidies from the health insurance exchanges.  If coverage is made available to the employee’s family, even if the employer does not contribute towards the cost, the family is also ineligible to receive a subsidy.  The subsides can reduce the cost of health insurance for a family so significantly, that it can make financial sense for the employee to work part-time, thereby being excluded from the company’s health insurance plan.  Once an employee is excluded, they are eligible to go to the state exchange and buy heavily subsidized health insurance.

A family of four earning $65,000 a year can obtain a health insurance policy through the exchange for $471 a month for the a Silver plan.  A similar employer plan costs on average $1,377 a month, with the employee responsible for a majority of the cost.  Another example for a family of four earning $45,000 a year, will pay only $216 a month for coverage for the entire family through a subsidized health plan compared to the average cost for family coverage through an employer plan of $1,377.

This huge disparity in costs has prompted many large employers such as Trader Joe’s, Target and Home Depot to be pro-active and stop offering coverage to their part-time employees, thereby making them subsidy eligible.  Employers should work pro-actively with their employees and allow them the option to reduce their hours to part-time to be able to afford health coverage for their family.

To explore strategies like this for your workforce, contact Affordable California at 800-788-2197.


AUTHOR - Ali Nagy