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PPACA Related Cuts

Original content from United Benefit Advisors

The news keeps rolling in, and the blame doesn’t spread very far.

Trader Joe’s, a nationwide chain of specialty grocery stores headquartered in Monrovia, Calif., on Sept. 12 became the latest big-name retailer to announce it would cut health coverage benefits to employees working fewer than 30 hours per week. According to Benefitspro, Trader Joe’s CEO Dan Bane informed his employees of the move last month. The company had been one of a group of several large businesses that offered part-time workers some benefits — a group that is rapidly shrinking.

The reason? Health care reform. The Patient Protection and Affordable Care Act (PPACA), many parts of which are set to go into effect Jan. 1, 2014, will offer premium subsidies to employees with low incomes who are not eligible for employer health coverage that meets certain standards and who enter the public exchanges. Beginning in 2015, penalties will be imposed upon employers if no coverage is offered to employees who work 30 or more hours per week, but no penalties will apply if coverage is not offered to part-time employees.

As reported in the Huffington Post, Bane on Aug. 30 delivered a company-wide memo stating, “The company will cut part-timers a check for $500 in January [2014] and help guide them toward finding a new plan under the Affordable Care Act. The company will continue to offer health coverage to workers who carry 30 hours or more on average. Depending on income you may earn outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the ACA, many of you should be able to obtain health care coverage at very little if any net cost to you.”

Trader Joe’s is hardly alone in making difficult choices in response to PPACA and rising health care costs. Kroger, which operates more than 2,400 grocery stores in 31 states, cut health benefits for some employee’s spouses earlier this year — following the lead of the United Parcel Service, which made a similar move months earlier. Kroger spokesperson John Elliott told Indiana Public Media, “There is a lot of comment about the Affordable Care Act and so on and those mandates are something that we have to factor into those discussion, but frankly, health care costs were going up dramatically with or without the Affordable Care Act. It just adds some specific requirements that we have to fund to deal with.”

In another PPACA-related manuever, theme park operator Sea World revealed that it would reduce its cap on weekly hours for part-timers to 28 hours from 32. The company does plan to add full-time hourly positions next year across its 11 parks, it said in a statement. Those full-time jobs will include health care benefits.

Lands’ End, an apparel maker, also has turned to the hour-cutting option, reducing hours to no more than 29 per week. WKOW in Madison, Wisc. reported a staff memo notified employees of the change, stating: “For some of you, working less hours may be what you wanted. For others, these new governmental guidelines may be very difficult. These guidelines applies (sic) to all companies in the US (unless they have less than 50 employees or are non-profit).”

Lands’ End spokeswoman Michele Casper told FOX Business the company doesn’t comment on internal employee practices.

“We plan to continue to employ part-time employees to best match our workforce to our workload,” Casper said.