Because of the health care reform law, some owners of restaurant chains such as Red Lobster and Olive Garden are hiring more part-time employees in an experiment to lessen their health care costs. Part-time workers are those who work less than 30 hours per week.
How will this help owners reduce their health care expenses?
Under the Patient Protection and Affordable Care Act, employers with 50 or more full-time employees are required to provide health care coverage to each employee and their dependents starting January 2014. Failure to meet this mandate would result in penalties. This requirement would also increase the expenditures of the company.
As a way to reduce this added expense, companies started to hire part-time workers since they are not required to provide health care benefits to part-time employees. According to a statement by Paul Keckley, executive director of the Deloitte Center for Health Statistics, “There’s not a company in those industries that aren’t looking at this.”
On a national scale, 60 percent of companies with employees of 200 or more provide health care benefits to their workers, based on findings of the Kaiser Family Foundation. However, only 48 percent of companies with workers less than ten provide employer-sponsored health insurance plans.
By next year, restaurant chains such as Darden will be making changes to how they will provide health care coverage to their employees. Instead of providing one health insurance plan, they will provide contributions for employees to buy their health care policies from the online health insurance exchange established by the state. The health insurance exchange will provide them health care coverage options as well as dental and vision plans.
This new radical concept in providing employer-sponsored health care benefits is called defined contribution health insurance. According to Darden, this new method will help stabilize their health care expenses.