Employer Beware: Managing Emerging Risks Presented By Obamacare

Employer Beware: Managing Emerging Risks Presented By Obamacare

The Affordable Care Act, also known as Obamacare, was created with a central goal in mind, namely, to put consumers back in charge of their health care. Under the law, a new “Patient’s Bill of Rights” operates to afford the American people the stability and flexibility for healthcare choices.  Access to healthcare for all however, comes at a premium for businesses that are mandated to supply healthcare to its employees.

One of the well-known provisions of the Affordable Health Care Act is the “employer mandate” which states that companies must provide health insurance coverage for employees or they will face government penalties.  Beginning in 2015, if an employer with fifty or more full-time employees fails to offer health care coverage to its employees, it will have to pay a $2,000 annual fine for each worker over the first thirty employees.   Companies with fewer than fifty full-time employees are exempt.  Employees who are not covered by their employers will be forced to obtain health insurance or face a tax penalty.  An exception to the general rule of the mandate is that an employer does not have to provide health insurance coverage for employees who log fewer than 30 hours per week on average. This part-time status exception has become a new loophole for creative employers who have already announced cuts to employee hours prior to qualifying for a health plan under the Act.

Employer beware-with the onset of the Affordable Care Act comes new risks for future creative employers who continue to slash employees’ hours to avoid Obamacare. Prior to the act coming into effect, many businesses opted to cut their employees’ hours, taking advantage of the part-time status exception.  Whether the law will apply retroactively to these precut hours remains to be seen.  A true risk is present however, for employers who choose to continue to cut hours after the 2015 commencement period.

Under section 1558 of the Act, a whistleblower protection is afforded to employees who have been subjected to a cut in employees’ hours.  This section states, “No employer shall discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee (or an individual acting at the request of the employee)” engages in a whistleblower type activity.  (See 29 U.S.C.A. § 218c.)  Pursuant to section 1558 of the Act, an employee who feels that their hours have been cut based on the provisions of Obamacare can then file a complaint with the Occupational Safety and Health Administration (OSHA). (See 29 U.S.C.A. § 218c(b)(1).)  The purpose of this provision has been indicated as providing protections to employees of health insurance issuers or other employers who may have been subject to retaliation for reporting potential violations of the law’s consumer protections prohibiting denials of insurance.  Under Section 1558 of the Act, retaliation complaints must be filed within 180 days of the adverse action, as required under 15 U.S.C. §2087(b), the whistleblower provision of the Consumer Product Safety Improvement Act.  OSHA’s Whistleblower Investigations Manual has reserved Chapter 19 to deal with the Affordable Care Act complaints.  This is not probative of a future influx of claims however, OSHA must anticipate claims of this nature, and the volume remains unknown.  Employers must exercise caution when embarking into the unknown as emerging risks due to Obamacare are real and the Act has codified remedies for employees whose hours are reduced with the purpose of avoiding the mandate.

By: Mariel Covarrubias, Esq.

The information presented in this article is intended for general educational purposes. It is not intended to be legal advice. Every company or person’s situation is different and requires individual analysis by competent counsel before legal advice can be rendered. If you are confronted by a legal issue retain competent legal counsel to advise you immediately. This article is not a substitute for legal advice from an attorney licensed to practice in your jurisdiction.

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