Obamacare: 25 Hours a Week Doesn’t Cut It

obamacare 25 hoursAs part of the ironically named “Affordable Care Act” companies that employ over 50 workers were required to offer health insurance to all full time employees, or face a stiff fine.  Full time employees were defined as those working over 30 hours a week.  This was obviously a move to increase the definition of “full time” so that more people would be covered by employer provided health insurance.  Historically 40 hours a week has been the metric for full time vs. part time.  Many part time workers work 39 hours a week. When I worked as a cook I routinely punched out at 39.9 or 40.0.

Unsurprisingly, politicians, who for the most part never worked an “entry level” part time job in their lives forgot the number one rule of economics. “People respond to incentives”. As we know, Corporations are people my friend! Employers have been making large efforts to reclassify workers and change their staffing practices in order to have the least amount of employees they need to provide health coverage for.  Essentially workers who used to work 40 hours a week, now can only work 29.9 hours, or even only 25 hours. The “Affordable Care Act” has caused substantial harm to the very people it was created to help.

Let’s look at the math because numbers illustrate the story well.

obamacare 25 hours

Workers affected by this law receive at a minimum a 25% reduction in pay, and by the way are still not covered by an employer plan. Depending on the company, they may be facing a 38% cut.  Making it on minimum wage is extremely difficult. Mrs C. and I have done it, but had we been limited to these cuts in hours we would have had to rely on others to support us.  I actually wonder if this was thought of by the people writing the Affordable Care Act.  Could it be that they wanted more people to be working fewer hours so that they would be required to rely on government assistance?

I would love for the entirety of the “Affordable Care Act” to be repealed, but at a minimum the requirement for companies to provide insurance for those working over 30 hours needs to be changed. either get rid of the mandate in its entirety or adjust the hours up to 40. The affordable care act provides a “look back period” of 3 to 12 months of work week averages to determine if an employee works more or less than 30 hours a week.

The Affordable Care act also has other weak points that can cause stiff penalties.  I made the ACA spreadsheet tool to estimate how much buying insurance will cost through the health car eexchanges and how much penalties will be for those who don’t purchase insurance or who underestimate their income.

Mrs. C. has worked part time for her employer for 8 years.  She has turned down promotions to full time in order to spend more time with the kids and to have flexibility around my work schedule.  Typically when I am not working she increases her hours to close to full time.  Recently her employer decided that part time employees can not receive over 25 hours a week.  Obviously this move affects us and our financial goals.

Has the Obamacare 30 hour limitation cut your hours or those of anyone you know?

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John is the author of the book For My Children's Children: A Practical Guide For Building Generational Wealth.

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