For Some Workers, Health Reform Brings No Coverage, Fewer Hours

(The News & Observer/MCT) -

McCoy Faulkner collects $81 a day as a substitute teacher in the Wake County (N.C.) Public School System. A mere sub, he has no benefits.

The 62-year-old former Raleigh, N.C. police officer shells out $580 a month for an individual insurance policy, more than half his monthly pay. The full-time teachers for whom Faulkner fills in, however, are eligible for free health insurance, with no monthly premiums, through their employer.

That’s why Faulkner was looking forward to the Patient Protection and Affordable Care Act, figuring he was the kind of person that the healthcare reform law was designed to help. Under the new law, anyone who works 30 hours or more a week for a large business will be eligible for employer-sponsored healthcare.

But instead of adding subs like Faulkner to its healthcare plan, the school system is looking for ways to avoid doing so. Wake is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1.

The reason: If just a third of the system’s subs were to qualify for employer-sponsored insurance, it would cost Wake schools about $5.2 million, chief business officer David Neter said.

“We’ll have some difficult decisions to make,” Neter said. “Something else would have to get cut. It’s equivalent to 20 full-time teachers or 40 teaching assistants. That’s how significant it is.”

The system is among the many employers across the country seeking ways to dodge the higher healthcare expenses that will arrive in January as a result of the Affordable Care Act.

While many businesses are scaling back work hours to keep part-timers out of the company insurance plan, others are not hiring so as not to cross the 50-employee definition for large employers – the federal threshold for having to insure full-time employees. Still other businesses are mulling the option of scotching company health coverage altogether and paying a federal fine instead.

The calculations often come down to counting full-time versus part-time workers, adjustments driven by legal definitions in the new law, said Brydon DeWitt, a lawyer at the Williams Mullen firm who advises businesses on the healthcare law.

DeWitt predicts some businesses will restructure themselves to employ mostly, or only, part-timers.

“They will have to monitor work hours like a hawk,” DeWitt said. ” ‘That person cannot work another hour this week because we can’t have him exceeding the threshold.’ ”

Faulkner, who lives in Wake Forest, N.C., said the response of Wake schools is frustrating for many reasons. Some subs had hoped to qualify for the system’s premium insurance plan. Others, however, already have insurance through spouses and simply want to put in a full week’s work.

“I never expected the Wake County Public School System to circumvent the intent of the law,” Faulkner said. “The biggest complaint I hear is from people who don’t need the insurance but will be limited in the amount of time they can work.”

The federal law is intended to reduce the numbers of uninsured by making health coverage more affordable for those who had been shut out of the healthcare system. The law prohibits long-accepted insurance practices, such as denying coverage for pre-existing conditions, charging more to insure women and significantly marking up premiums for older people.

It also makes insurance mandatory, with fines for individuals and companies for failing to comply.

It’s expected that some will opt for the fines. Nancy Adams, owner of two Piggly Wiggly grocery stores in North Carolina, said that’s one option under consideration for her business. The $2,000-per-worker fine would apply to just five full-time employees at the two stores, amounting to $10,000 a year, she said, because the law exempts the first 30 workers from the fine.

Adams said the company would save considerably and likely give workers a $2-an-hour pay raise to help them buy individual policies on a healthcare exchange. Such exchanges, created by the Affordable Care Act, are designed for those who buy coverage on their own.

Adams’s grocery business has 86 employees, and currently provides insurance to 31 of them at a cost of about $120,000 a year. Insuring all those who work at least 30 hours would raise the cost to about $165,000, she said.

“We don’t have the pockets to pay an extra $45,000 for health insurance,” Adams said. “It’s huge.”