Part-Time Benefits: A Moving Target
Health care reform may cause employers to reconsider benefits they offer to part-time employees.
This summer's Supreme Court decision upholding the Patient Protection and Affordable Care Act has employers scrambling to redefine "part time." Under the law, employees who work 30 or more hours a week will be considered full time and will be eligible for health care coverage. This requirement means companies with 50 or more full-time employees have to reassess their entire range of benefits.
"We are just planning the best we can," says Tyler Sanderson, director of total rewards at BlueCross BlueShield of Tennessee in Chattanooga.
16.7 percent in 2007, according to the Employee Benefit Research Institute. The Bureau of Labor Statistics reported that there were nearly 35 million employees working fewer than 35 hours a week in 2011. But relatively few employers offer benefits to their part-time workers. In 2012, 28 percent of organizations of all sizes that offer health benefits offer them to part-time workers, according to the 2012 Employer Health Benefits Survey report from the Kaiser Family Foundation and the Health Research & Education Trust. That is a notable increase from the 16 percent reported in 2011, but in line with the 25 percent reported in 2010. Larger employers are more likely to offer health benefits to part-time employees. In 2012, 45 percent of employers with 200 or more full- and part-time employees offer benefits to part-timers, compared with 28 percent of smaller companies, the survey of 3,326 public and private employers showed. Part-time jobs are common in the retail, food services and construction industries. They are often low-paying and typically do not require advanced skills or training. Employers with the most part-timers are the least likely to cover them, says Beth Umland, director of research for health and benefits at Mercer in New York City. "In companies where there may be some part-timers but the business model is not built around them, those working 20 or more hours are covered. In industries where part-timers make up at least 10 percent of the workforce—which includes two-thirds of retail and hospitality and 59 percent of health care employers—there has been the business decision not to cover them because it is expensive," she explains.
This summer's Supreme Court decision upholding the Patient Protection and Affordable Care Act has employers scrambling to redefine "part time." Under the law, employees who work 30 or more hours a week will be considered full time and will be eligible for health care coverage. This requirement means companies with 50 or more full-time employees have to reassess their entire range of benefits.
"We are just planning the best we can," says Tyler Sanderson, director of total rewards at BlueCross BlueShield of Tennessee in Chattanooga.
Uncommon Benefits
Part-time workers made up 22.2 percent of the workforce in 2011, up from16.7 percent in 2007, according to the Employee Benefit Research Institute. The Bureau of Labor Statistics reported that there were nearly 35 million employees working fewer than 35 hours a week in 2011. But relatively few employers offer benefits to their part-time workers. In 2012, 28 percent of organizations of all sizes that offer health benefits offer them to part-time workers, according to the 2012 Employer Health Benefits Survey report from the Kaiser Family Foundation and the Health Research & Education Trust. That is a notable increase from the 16 percent reported in 2011, but in line with the 25 percent reported in 2010. Larger employers are more likely to offer health benefits to part-time employees. In 2012, 45 percent of employers with 200 or more full- and part-time employees offer benefits to part-timers, compared with 28 percent of smaller companies, the survey of 3,326 public and private employers showed. Part-time jobs are common in the retail, food services and construction industries. They are often low-paying and typically do not require advanced skills or training. Employers with the most part-timers are the least likely to cover them, says Beth Umland, director of research for health and benefits at Mercer in New York City. "In companies where there may be some part-timers but the business model is not built around them, those working 20 or more hours are covered. In industries where part-timers make up at least 10 percent of the workforce—which includes two-thirds of retail and hospitality and 59 percent of health care employers—there has been the business decision not to cover them because it is expensive," she explains.
Premium Plans
While Wal-Mart announced last year that all new employees working fewer than 24 hours a week would no longer be eligible to participate in company health care plans, a number of employers with significant part-time populations continue to offer health coverage. In most cases, these plans are the same ones offered to full-time workers, but part-time employees pay a greater percentage of the premiums. On average, part-time employees at large companies pay 35 percent for individual coverage and 41 percent for family coverage, while full-timers pay 22 percent and 30 percent respectively, Umland says. Here are three diverse examples: East Providence, R.I.-based Rhode Island Medical Imaging has three tiers of part-time employees. While they all receive the same health care benefits as full-time co-workers, each tier pays a different percentage of the premium: Part-timers working 20 to 28 hours a week pay 55 percent, those working 29 to 34 hours pay 45 percent, and those working 35 to 39 hours pay 35 percent. Full-time workers pay 25 percent of the premium. All employees have a $2,000 deductible but must cover only the first $500, with the company providing the rest. BlueCross BlueShield of Tennessee part-timers, who work 20 to 39 hours a week, make up 5 percent of the company's 5,300 employees. They pay twice the rate as full-timers but are eligible for the same preferred provider organization or high-deductible health plans and company contributions to health savings accounts as full-time co-workers. Atlanta-based United Parcel Service provides part-time nonunion workers the same level of benefits, whether they work 20 hours a week or 30. Their health plan is similar to the full-time plans offered to union employees and is negotiated by the Teamsters to set a single, national UPS health plan for part-timers, explains Health Care Manager B.J. Dorfman. The preferred provider organization plan covers upwards of 90 percent of the costs for doctor visits and 100 percent for hospitalization.Future Strategies
Beginning Jan. 1, 2014, employers with 50 or more employees who work 30 or more hours will have to provide health care benefits or pay a penalty. The requirement leaves employers facing a number of decisions concerning part-time benefits. "There are going to be a lot of ways to split the baby," says Amanda Austin, director of federal public policy for the National Federation of Independent Business. Two-thirds of large employers say they will cover part-timers, but only one-third of small employers plan to, according to Health Care Reform: After the Decision, which reflects the results of a 2012 Mercer survey of 1,203 employers across all industries. Employers not already in compliance with the changes required by the health care reform law have three main options, Umland says, citing the survey's findings:- Change their workforce strategies so that fewer employees work 30 or more hours a week (50 percent of the respondents said they plan todo this).
- Offer new low-cost high-deductible health plans for newly eligible employees (27 percent).
- Make part-time employees eligible for the full-time health insurance plan (24 percent).
Goodbye, Mini-Meds
Limited-benefit plans, or mini-meds, now cover more than a million part-time and hourly employees, estimates Brian Robertson, executive vice president of Fringe Benefits Group in Austin, Texas, a benefits provider for companies with part-time employees. But these mini-med plans are going away, for the most part.
There are two types of these limited-benefit health plans:
Expense-incurred mini-meds require co-pays or co-insurance and pay up to a specified annual amount as low as $2,000. They will no longer be allowed beginning in 2014 because the health care reform law bars annual and lifetime caps on benefits.
Indemnity-style mini-meds pay a per-visit or per-diem amount. These plans may still be offered after that date but do not need to comply with health care reform requirements because they are supplemental plans. Some employers may decide to continue offering them as a supplemental voluntary benefit, Robertson says, especially if employees are covered under high-deductible health plans, either through the workplace or through public or private exchanges.
Not Just Medical
Medical benefits are by far the most popular benefits for part-time workers. But several companies that offer medical insurance provide additional part-time benefits: Rhode Island Medical Imaging part-timers have access to the same benefits as full-timers, except for life insurance and long-term disability. They receive dental, vision, supplemental health and pet insurance; holidays, vacation and sick time; and a 401(k) and profit sharing plan. Part-time employees at BlueCross BlueShield of Tennessee are eligible for dental, vision and reduced life insurance; flexible benefits programs; prorated paid time off; retirement plans; holiday and vacation pay; college tuition reimbursement; and wellness and employee assistance programs. Benefits for part-time employees at UPS include dental, vision and life insurance; prescription drug coverage; tuition reimbursement; a discounted stock purchase plan; and most of the other benefits full-timers receive, including wellness programs. As employers sort through responses to the health care reform law, more are considering voluntary benefits. Mercer sees a trend as employers expand voluntary options and extend them to part-time populations. According to the results of the consultancy's 2011 National Survey of Employer-Sponsored Health Plans, a survey of 2,844 public and private employers, "38 percent of large employers say they are likely to add voluntary benefits or transition some employer-paid, nonmedical benefits, such as dental or disability, to voluntary." "We are seeing a shift toward transferring more costs from employer to employee," adds Rich Fuerstenberg, senior partner at Mercer in New York City. He says some employers may move to flex funding, giving employees a set amount and letting them purchase the benefits they want on private exchanges.The Value of Benefits
Even in this economic climate, companies still need to attract key employees, especially workers with special skill and knowledge sets. Rhode Island Medical Imaging offers part-time benefits because its leaders are aware of the difficulty of finding qualified radiology technologists. The company has a staff of 200, and a number of its 56 part-time workers are young mothers. "There is a lot of competition in this tiny state," explains Lynn Flynn, SPHR, director of human resources. "By offering the benefits package, people come and they stay. We have people who have been here over 40 years." UPS has more than 85,000 part-time employees enrolled in its health care plans, and employees are also offered other benefits. Most of the 400,000 workers start their careers as part-timers; benefits help attract quality workers. Oneida Airport Hotel Corp., owner and operator of two hotels in Green Bay, Wis., offers part-timers paid time off and accident and critical care plans. Almost one-third of the 375 employees are part time, working 20 to 30 hoursa week. "Part-time benefits is a recruitment and retention tool for us in an industry that experiences high turnover due to lower pay and inconsistent hours," says Meg Waldo, director of human resources.Jen DeFranco's employer seems to agree. She is an HR generalist for The Personnel Department, a professional employer organization in Colorado Springs, Colo. The mother of two started looking for part-time employment after the birth of her son three years ago. "In Colorado Springs, you don't find part-time HR work very often. When I found out about this job, I jumped on the opportunity," she says. The job allows her to continue her career, stay current in her field, take care of her children—and utilize company benefits.
The author is a freelance writer based in Chattanooga, Tenn.Web Extras
- SHRM HR Q&A: Eligibility: Are we legally required to provide benefits to part-time workers?
- SHRM HR Q&A: Health Care Reform: How do part-time employees affect the implementation of health care reform in my company?
- SHRM article: Guidance on Full-Time Employees, 90-Day Waiting Period Limit (Benefits Discipline)
- Report: Summary of Potential Employer Penalties Under the Patient Protection and Affordable Care Act (Congressional Research Service)
- Press release: Health Reform Poses Biggest Challenges to Companies with the Most Part-Time and Low-Paid Employees (Mercer)
- Report: Trends in Health Coverage for Part-Time Workers (Employee Benefit Research Institute)
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