Many companies that are reliant on low-wage workers are reassessing their business models in light of the Affordable Care Act’s mandate that they provide all full-time employees with affordable health insurance by 2014, or pay a penalty.
On January 1, 2014, companies with 50 or more full-time workers will be required to offer a minimum level of health coverage or pay a penalty, starting at $2,000 per full-time employee after the first 30 hours. If a company offers health insurance that is found to be minimal or unaffordable, the company will be required to pay a penalty of $3,000 for every worker who receives a federal subsidy to purchase health coverage on the individual market.
Some employers are trying to determine whether they should cover all their employees or pay the fines, which could be a more cost-effective strategy. Other companies are considering layoffs or shifting their current full-time employees to part-time status.