Bill Would Require Health Coverage for Virtually All Part-Time Workers at Large Companies

February 13, 2014

During this Legislative Session there has been no shortage of bills that would increase the cost of doing business in Washington and stymie job creation.

One of those bills is HB 2588. Known as “The Fair Share” bill, HB 2588 would require employers with 500 or more employees to pay an “employer responsibility penalty” for workers who work more than 104 hours per quarter (that is just 8 hours per week) and receive taxpayer subsidized health care assistance instead of coverage through the employer.  HB 2588 goes far beyond federal requirements under the Affordable Care Act (ACA).

The ACA requires employers with 50 or more employees to make affordable coverage available to their full-time workers, defined as 30 hours per week per month, or face a penalty for each worker who receives subsidized coverage.  There is no penalty if workers that average less than 30 hours per week (considered part-time employees by the ACA) receive subsidized coverage.  HB 2588 would change that for the state’s large (500+) employers, lowering the threshold to just over 8 hours per week.

The low threshold means large employers, including non-profits, would be forced to provide health insurance coverage to even seasonal or temporary workers.  Of course, the state government would be exempt from the requirement.

By targeting only employers with 500 or more workers, supporters give the perception that HB 2588 is narrowly applied and won't have a significant impact on the state's business climate.  But while the 499 large companies impacted by the bill comprise just .4% of the state’s employers, they employ 37% of the state’s workforce.  That is significant.

According to the state Employment Security Department, around 70% of part-time employees in firms that employ 500 or more are already offered employer-sponsored health insurance.  The average monthly health insurance premium per employee is $590 and the large firms pay an average of 75% of those premiums for their part-time workers, which is $442 per month.

By requiring these employers to offer health benefits to workers who clock as few as 8 hours per week, this bill would ensure that virtually every employee of these companies would be covered.  So these employers would go from covering an already generous 70% of part-time workers to nearly 100%.  

How much would this increase cost these employers?  Nationally, part-time jobs account for 19.5% of total employment.  Let’s assume this trend holds true in Washington.  There are 727,327 workers employed by companies with 500 or more employees.  Applying the national average, 141,828 of these workers are part-time.  Of these part-time workers, 30%, or 42,548, do not currently receive health care benefits.  Under HB 2588, almost all of these part-time workers would receive benefits, which currently costs large employers an average of $442 per month.  That is an increase on the 499 companies targeted by HB 2588 of $19 million per month, or $226 million per year. 

Forcing employers to provide health insurance to almost every part time worker would likely result in those companies hiring fewer part-time workers.  Companies would make do without part-time workers, instead shifting those part-time job duties to existing full time employees. 

Many part-time workers are young people just entering the workforce, and part-time jobs give them the experience they need to advance.  Close to 70% of part-time workers choose to work part-time—they are second household earners looking to supplement income while children are in school, retirees not yet ready to quit working, or students working part time while taking classes.  Forcing employers to provide health coverage for all part-time employees will mean fewer jobs for these workers who want them.

The bill died after failing to pass out of the House Health Care & Wellness Committee, and so is considered dead this session.  However, based on a comment from the bill’s sponsor calling HB 2588 the “start of a conversation,” it is likely this legislation will reemerge in future Legislative Sessions.