Will employers cut health care options, hours due to ACA delay?

As the benefits industry is still reeling from the Affordable Care Act delay, others in the research practice see it as posing a question of whether employers will cut available health care plans in light of the employer mandate.

On Monday, the Internal Revenue Service, along with the Department of Treasury, disclosed that employers with fewer than 100 employees were granted a one-year exemption from providing insurance on Jan. 1, 2015. These companies are still required to report their workers and coverage next year, but will have until 2016 to pay for affordable health insurance for its full-time workforce.

While the Employee Benefit Research Institute did not offer a formal statement on the delay, Paul Fronstin, director of EBRI’s health research and education program, explains that there is a misconception over the employer responsibility provision that will surface during this limbo period.

“I’ve always viewed the mandate, not as a mandate to offer coverage, but as mandate to not stop offering it,” Fronstin says. “It only affects employers with 50 or more employees, even before the ACA was passed; there was over 90% of those employers already offering coverage.”

He adds that employers will also have to start asking whether they should take steps to limit coverage by cutting back employee hours or hire a part-time workforce to limit requirements under the mandate. Fronstin adds that there was different sentiment back when ACA was passed in 2010.

It was easy to conclude that employers would drop coverage or cut people’s hours when the law was passed in 2010 in lieu of the $2,000 fine, Fronstin says, while noting that this “mentality was short-lived because reality set in.”

“You’ve got more people not looking for work for various reasons and it makes it harder for employers to hire the people that they want to hire,” says Fronstin. “I think most employers can’t simply hire more timed workers as a result of the law. Its broader economic conditions may overwhelm an employer’s desire to make everyone part-time.”

The Congressional Budget Office said earlier this month that ACA will cut about 2 million full-time jobs in 2017, primarily from the low-wage earning group. From 2017 to 2024, the total number of hours worked is predicted to drop by 1.5% to 2% as result of the connected to the tax advantages, the legislative branch’s research arm stated.

“We like to boil a lot of these things down to black and white and it’s just not,” says Fronstin.