The IAM joins labor in strongly opposing two bills that seek to increase the threshold at which employers are required to either offer health care coverage or pay a penalty under the Affordable Care Act (ACA).
Both the “Save American Workers Act” (H.R. 2575) and the “Forty Hours is Full Time Act” (H.R. 2988) would increase the threshold to 40 hours a week.
But, contrary to the intent of the legislation, economic data shows that raising the threshold would cause more employers to reduce their employees’ hours, resulting in 6.5 million working families losing their employment-based insurance coverage.
“The bills introduced by Representatives Young and Lipinski would take the ACA in the opposite direction, compounding the problem they seek to solve,” reads an AFL-CIO letter to members of the House Ways and Means Committee. “As the Ways and Means Committee examines these issues in a hearing this week, and as discussions continue, the House should instead seek to strengthen the employer responsibility requirements of the ACA by lowering the hours threshold, requiring employers to provide coverage for workers who work 20 hours a week or more, and by applying a pro rata shared responsibility penalty if workers with fewer than 20 hours are not offered coverage. This is the only way to protect groups of workers – such as low-wage employees, school staff, and adjunct professors – that will lose wages under the existing incentive to reduce hours.”
A December 2013 analysis by the UC Berkeley Center for Labor Research and Education found that the approach employed by this legislation – moving the threshold for coverage from 30 hours to 40 hours – would result in reduced work hours for three times as many workers (6.5 million) compared to the number vulnerable to a reduction of hours at the current threshold (2.3 million). The researchers also found that the approach would “effectively eliminate” the employer shared responsibility requirement, because employers could cut workers to 39 hours or less with relatively little cost.
Unfortunately, the ACA’s employer responsibility requirements do not adequately sanction employers that drop coverage or decline to offer affordable, comprehensive coverage. The $2,000 penalty for not offering coverage to a full-time employee pales in comparison to the average annual cost of single coverage, which was $5,884 in 2013. And, the ACA’s extension of Medicaid eligibility to the uninsured will tempt low-road employers to move lower-income employees into the program, since the law has no penalty to discourage employers from shifting the responsibility for covering these workers.
To read the AFL-CIO letter to the House Ways and Means Committee in its entirety, click here.