Tag Archive: part time workers

Interest in private exchange marketplace heats up

The Patient Protection and Affordable Care Act’s creation of the state health benefit exchange marketplace is aimed at restoring functionality to the individual and small group markets. By the time the Affordable Care Act was enacted in early 2010, these segments were inescapably mired in an adverse selection death spiral. Premiums grew unaffordable and carriers lost the ability to spread risk as state risk pools shrank. The exchange marketplace seeks to remedy this by scaling up the size of the pool and providing a demand aggregation mechanism that with sufficient enrollment can achieve better spread of risk and, in turn, lower premium rates.

The Affordable Care Act does not initially offer the demand aggregation mechanism of the public exchange marketplace for large employers but gives states the option of opening their exchanges to large employers in 2017. However, large employers seeking relief from rising employee health care costs aren’t about to wait. Instead, they are looking at private exchanges being formed by benefit consulting firms serving large employers. Several large employers participating in a private exchange could potentially cover many thousands of people and bring them into the pool far faster than state exchanges that have to enroll individuals and small employers one at a time.  Private exchanges also make it easier for big employers to adopt defined contribution-based health benefits in which employees would select from a larger number of plans than might otherwise be offered by a single employer. Media coverage this week of burgeoning interest in the private exchange marketplace can be viewed here and here.

While large employers of relatively highly paid full time workers find the private exchange marketplace of interest to reduce the cost of covering their workforces, those with low wage, part time staff are looking to the state exchange marketplace. It provides a means for these employers to reduce their health care outgo by sending part time workers (defined in the ACA as having an average work week of less than 30 hours) to purchase individual plans sold on the state exchanges and subsidized by advance income tax credits. Two such employers – specialty grocer Trader Joe’s and Home Depot –indicated in recent days they would take this route.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California bill aimed at deterring large employers from placing low wage workers on part time status to avoid ACA coverage mandate

California employers with 500 or more workers would be required to pay the state a penalty based on the average cost of coverage provided by large employers for those employees that enroll in Medicaid (Medi-Cal in California) coverage under advancing legislation.

According to an analysis of AB 880 prepared by the Assembly Health Committee, the bill is aimed at deterring large employers with sizable numbers of low wage workers from reducing their hours to less than 30 hours per week in order to avoid the Patient Protection and Affordable Care Act requirement to offer coverage to all workers employed at least 30 hours per week. “The author states this bill is designed to ensure that the largest employers in the state do not evade their responsibilities under the ACA by cutting hours and eliminating benefits so that their employees qualify for Medi-Cal,” the analysis states.  “This shifts costs onto the public and threatens the fiscal solvency of the state.”

As AB 880 moves forward, legislation stating intent to expand California’s Medicaid eligibility under the Affordable Care Act to households earning up to 133 percent of federal poverty level has bogged down over the extent to which counties should share in the cost and the Brown administration’s concern over the long term fiscal impact of the expansion and specifically whether California will remain obligated to honor it if federal cost share funding is cut in the future. Anxiety over Medicaid remains high among the state’s budget writers.  They viewed the state’s Medicaid cost share as a budget buster during years of fiscal shortfalls following the economic downturn that began in 2008.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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