A handful of U.S. cities, led by Chicago, are working to shift retiree health care expenses (OPEBs) off their balance sheets and onto the federal government via President Obama’s Affordable Healthcare Act. Retiree healthcare is a big expense for muniland, and few governments have saved for this expense. Since OPEBs are often protected by contract, they are not easily lowered or adjusted. Spending such as education and other programs is often crowded out. Shifting some of these retiree benefits to Obamacare is attractive for many stressed cities.
Some municipalities are reducing employee hours to qualify them as “part time” under Obamacare rules. The municipality then wouldn’t have to provide health care. Asbury Park Press reports:
[Middletown, N.J.] shaved back hours for some part-time workers to avoid providing insurance required under the federal health care reform law, the Asbury Park Press has learned.
The change impacts about 25 part-time employees. But that could translate to a $775,000 annual increase in the township’s health insurance costs, based on the current benefits in place now, which are about $31,000 per employee.
Starting May 1, Middletown adjusted hours for part-time employees to make sure they work, on average, less than 30 hours per week, the threshold that the Affordable Care Act considers a full-time employee.