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CBO Estimates Employment Dwindling Due to ACA

This week the Congressional Budget Office projected that the Affordable Care Act will reduce the amount of hours worked

by Americans by an equivalent of 2 million full-time jobs. Why is this happening? It is happening because of the actions by either an employer or an employee. Employers are making decisions about their staff that are driven by the Employer Shared Responsibility Tax, which officially takes effect in 2015, although there are several tangible requirements of the law that need to be handled in 2014.

Under the law, employers must offer coverage to their Full-Time employees beginning in 2015 or be subject to potential penalties. Full-Time is defined as anyone that works on average 30 or more hours a week or 130 or more hours in a calendar month. Because of this change in the definition of Full-Time employee many employers are scaling back the hours of service worked by their staff. This way they can avoid the responsibility of offering them coverage and avoid penalties. This strategy has been formally adopted by several major companies in the country, including Walmart.

Employers are not the only decision makers here that effect hours. Many employees are scaling their own hours back so that they can take advantage of the subsidies that are available through the Exchanges. Subsidies are available, on a sliding scale, for individuals and families that;

  • Are not offered affordable minimum value coverage from an employer, and
  • Whose household income is between 100% and 400% of the federal poverty limit for the lower to lowest income families, these subsidies can be quite substantial, which is why some employees are rethinking the amount of hours they are working. ?Trusted advisors need to be aware of the various factors that go into these decisions for both employers and employees. These are the types of decisions that advisors are helping clients with on a daily basis and without a working knowledge of the Affordable Care Act, along with helpful solutions; advisors will not be able to maximize their value to their clients.

Make sure that you are an advisor of the future by grabbing a hold and taming the Affordable Care Act, and using solutions like the ACA Decision Support Tool and the ACA Dashboard!