Cedar Falls, Iowa, Cuts Worker Hours to Avoid Health Insurance

November 29, 2012

Officials in Cedar Falls, Iowa, plan to reduce dozens of part-time public employees’ hours in order to avoid having to offer them insurance under a requirement of the federal health care overhaul set to take effect in 2014.

Cedar Falls Administrative Services Director Richard McAlister said the reduction in hours for 59 workers is necessary because if all of them opted for insurance that must be offered under the federal law, the city could face an additional $855,000 annual cost, the Waterloo-Cedar Falls Courier reported. McAlister said that would require employee layoffs.

The part-time employees aren’t currently eligible for health insurance, but the new federal law will require employers to offer insurance to part-timers who work 30 or more hours per week. The city can avoid the requirement by cutting part-timers’ hours from 32 to 29 hours a week.

The city of 40,000 residents probably will hire more part-time employees to make up for the decline in hours by other workers, McAlister said. Before the law, Cedar Falls had been relying more on part-timers in an effort to avoid increases in employee benefits, such as health insurance and pensions.

McAlister said the move hasn’t been welcomed by workers.

“I think the employees were obviously disappointed,” he said. “It’s something we can’t contain, and we felt the best decision was to spread the impact out among the employees rather than lay people off.”

McAlister said the requirement is especially hard on public employers because insurance premiums are usually lower for public employees and they’d be more likely to take the insurance.

The federal law doesn’t take effect until January 2014, but McAlister said action is required now because the law has a look-back period that determines who is eligible. Although that period can be as short as three months, the city wants to be sure seasonal employees don’t qualify.

Most of the employees whose hours will be reduced work in the public works department and human and leisure services, which includes parks, recreation and the library.

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