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US Employers Slashing Worker Hours to Avoid Obamacare Insurance Mandate

Trend sparks fears among low-paid workers that they will be hit twice: by having earnings cut and paying more for healthcare.
 
 
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A doctor examines a patient at Community Health of South Florida on February 21, 2013 in Miami, Florida. US federal health spending will keep growing over the next 25 years but at a slower-than-expected pace, the Congressional Budget Office said Tuesday i

 
 
 
 

Avita Samuels has worked at the Mall of America in Minneapolis for the last four years, juggling a sales job with her studies in political science and law at the University of Minnesota. The 24-year-old has been the top sales associate for the last three years and works between 29 and 35 hours a week. But over the past few months, she said, she has watched as friends working in stores around her have their hours and benefits slashed – and she's worried that she will be next.

Forever 21, the clothing store, told staff last month in a memo leaked to the press that it planned to cut hours and reclassify some full-time workers as part- time. The move, which the company denied had anything to do with President Barack Obama's health reforms, the Affordable Care Act (ACA), will nevertheless help it avoid a mandate under the legislation requiring companies with 50 or more employees to offer those working 30 hours a week or more  health insurance. Earlier this month, Seaworld, which operates 11 entertainment parks across the US, capped hours for part time workers at 28, down from 32,  according to the Orlando Sentinel.

Other retailers, such as Trader Joe's and Home Depot have said they will no longer provide medical coverage for part-time employees, and will shift them instead to the public healthcare exchanges which open Tuesday, 1 October. Some employers have said their health costs will rise as a result of various provisions of the ACA, which takes full effect in 2015, when larger companies have to provide health benefits to full time workers or pay a $2,000 per-person fine.

The trend has caused fears among low-paid workers living on the breadline that they will be hit twice – by having their hours and thus earnings cut and by having to pay more for healthcare. Based on what she said is happening in the stores around her, Samuels is concerned she too will have her hours cut and with it her eligibility for company healthcare under the ACA.

"It's a really scary situation," said Samuels, who earns $9.25 an hour and is trying to reduce a student loan debt of close to $50,000. She currently receives subsidised healthcare through her university, but it runs out next year, when she had hoped her employer healthcare would kick in.

"Technically, I should be eligible," she said. "But at least 20 stores around me have cut hours. I live paycheck to paycheck. I have credit card debts. It's a balancing act. I'm afraid I won't be able to afford healthcare."

As one of the nation's lowest-paid workers, with little job security, Samuels is not alone in her fears that she may be worse off when the ACA takes full effect.

Following a  callout to hourly workers who had experienced recent changes in hours or health benefits, the Guardian was contacted by employees and their families. Two of them said they were so concerned about additional costs of healthcare, they were considering not buying insurance at all.

Typing Samuel's average earnings of $15,000 a year and her state into the  subsidy calculator on the Kaiser Family Foundation website, reveals that, if her employer did not offer healthcare and she were to enter a healthcare exchange, she would be eligible for government subsidy and would pay $300 a year towards the $1,449 cost of a plan. Samuels, who is already struggling financially, said this will represent a massive additional burden should her hours be cut by her employer.

survey by the International Foundation of Employee Benefit Planspublished last month, found that 15% of large employers (50 or more employees) and 20% of smaller employers had plans to adjust hours so that fewer employees qualify for full-time medical insurance under the ACA.

 
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