3 Companies Doing Right by Their Employees Ahead of Obamacare's Implementation

Chances are that you don't have to look for very long to find articles or statistics that are critical of the health reform law signed into law by President Obama in 2010: the Patient Protection and Affordable Care Act. Here at The Motley Fool, we've addressed some of these criticisms head-on while also pointing out how the law could wind up benefiting millions of people while complementing parts of our existing health-care system. Regardless of how you feel, the reaction to the bill -- also known as Obamacare -- remains very mixed and uncertain.

What isn't uncertain are the numerous big businesses that have been profiled in recent months for scaling back employees' hours or flat-out cutting jobs in order to avoid having to provide health care insurance to their employees. Under the PPACA, business of 50 or more employees are required to provide health insurance for their employees, but not to necessarily kick in a subsidy to help that employee pay for their health insurance. However, if the cost of an employees' insurance surpasses 9.5% of their income, the business can be fined $2,000 to $3,000 per employee.

Companies cutting corners... and hours
Rather than risk those penalties, businesses like Regal Entertainment, the largest operator of movie theaters in the United States, scaled back hours for thousands of employees to less than 30 per week (the level outlined by the PPACA as full-time), nullifying their chance of receiving employer-based health insurance as well as hurting them directly in their pocketbook.

As I outlined over the weekend, United Parcel Service (NYSE: UPS  ) also made the rather unpopular move of announcing that it would not allow spouses for some 15,000 employees to be added to their health plans in 2014, affecting about 25% of its workforce. The move, plain as day, was made to help reduce costs by $60 million in lieu of Obamacare.

Some companies have been even more drastic with their approach to dealing with Obamacare. Medical device maker Stryker (NYSE: SYK  ) laid off 1,000 people, or 5% of its workforce, in order to save more than $100 million annually because of the medical device excise tax of 2.3% that it now has to pay.

Three corporate heroes
The good news is that there are some heroes mixed in with the corporate crowd -- even some that have redeemed themselves -- that are doing right by their existing employees and owning up to their responsibility to provide health insurance to full-, and in some cases, part-time employees.

The model of consistency here has to be bulk retailer Costco (NASDAQ: COST  ) . Even before Obamacare became the law of the land, Costco was divvying out health benefits to full-time and part-time employees (and spouses!). Following the announcement of Obamacare becoming law, instead of scaling back hours or benefits, Costco saw this law as a way of complementing its already existing health plans and benefits. As such, Costco forged an alliance with Aetna (NYSE: AET  ) to offer an individual insurance plan known as Costco Personal Health Insurance that would be priced below state-run exchange rates. If anything, Costco employees will be receiving the same quality care, if not better, than before.

Just yesterday, Starbucks (NASDAQ: SBUX  ) CEO Howard Schultz, in an interview with Reuters, announced that, "...Starbucks will continue maintaining benefits for partners and won't use the new law as excuse to cut benefits or lower benefits for its workers." This is big news because the restaurant industry is among the sectors expected to be hit hardest by a transition to part-time labor. With Starbucks among the industry's largest restaurateurs -- employing some 160,000 employees worldwide -- this could be a move that leads to actual change within the sector. 

Even Darden Restaurants (NYSE: DRI  ) , the holding company behind Red Lobster and Olive Garden, has done well to redeem itself after initially signaling that it would tinker with hiring more part-time employees. Following this short-lived experiment, Darden realized the value of having its 45,000 full-time employees in its restaurants more often as forging connections with customers is certainly more valuable than whatever cost-savings the company would have racked up from cutting employees' hours.

Could these corporate heroes start a trend that sees more companies bucking the trend and sticking firm to their full-time hiring habits? Only time will tell if that's the case, but these three companies should certainly get a pat on the back from everyone in the meantime.

There's little denying that Obamacare is rewriting the rules for the health care industry, and in the process of doing so, it's creating massive opportunities for investors to get ridiculously rich. How? By investing in a handful of specific health care stocks. In this free report, our analysts walk you through these opportunities and the companies that are positioned to exploit them. The informational edge contained in it is invaluable, but can only be exploited profitably while the rest of the market remains in the dark. To access this free report instantly, simply click here now.

 


Read/Post Comments (33) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On August 27, 2013, at 2:23 PM, Jimmy7855 wrote:

    UPS made these changes to non union and manegement benefits only. It was only done as a ploy in the current contract negotiations. Make extreme changes to the non union benefits to get them to complain, union employees may feel lucky to only see minor changes in their plan.

  • Report this Comment On August 27, 2013, at 2:31 PM, Makikijoe wrote:

    God bless the companies who know how important health care is to their workers and are doing their best to make sure as many of their workers are covered as possible.

    Not all companies are selfish and callous like Regal Entertainment. And UPS is clearly using the new health care law as a EXCUSE to cut off certain people from "family plans" simply because it CAN. I wish some provision had been written into the new law to punish companies that pull that stunt.

    The favorite way for Republican lawmakers to cast aspersions on any legislation that improves the rights of workers is to label it a "job killer".

    But this raises another more profound question. Should we, as a society, allow millions of fellow Americans who are in need health insurance to do WITHOUT this basic necessity by repealing the new health care law. And should we do that just because a relatively small percentage of employers (when compared to ALL American employers) are scaring people with threats of reduced wages or coverage ? Should our nation’s lawmakers allow such employers to get away with this kind of intimidation ?

    No !

  • Report this Comment On August 27, 2013, at 2:43 PM, j1rose wrote:

    Learn about companies BEFORE you cast them aside - Regal like many CInema theater companies has a rough road ahead of itself with netflix, dvds etc killing their profits and revenues , Many Movie chains have had to extremely cut back.

    The first rule is survive and profit , then you can worry about employee's. Theater employee's are just above Mddonalds as far as skill sets and very replaceable. PERIOD>

  • Report this Comment On August 27, 2013, at 2:44 PM, jhedden wrote:

    Ok, you pay for someone else's health insurance. For me, as a person that has always carried my own health insurance (this includes when I was working my way through college) I see no need to subsidize some other person, not just for health insurance but for anything. If you want it go get it, if you can't get it work harder, if you don't want to work harder then shut up and move on.

  • Report this Comment On August 27, 2013, at 2:46 PM, j1rose wrote:

    UPS is simply adhering to the law . Why should they pay benefits they contractually don't have to ????????? >>> If you disagree, please open your wallet and send me money ....

  • Report this Comment On August 27, 2013, at 2:49 PM, sammy1952 wrote:

    at least be honest in your article "As I outlined over the weekend, United Parcel Service (NYSE: UPS ) also made the rather unpopular move of announcing that it would not allow spouses for some 15,000 employees to be added to their health plans in 2014" i believe they will not allow spouses who have access to healhcare at their own job! That is a big difference and you call yourself a journalist i would say you are a partisan LUG!

  • Report this Comment On August 27, 2013, at 3:01 PM, wallscreet wrote:

    So, these companies are doing right by keeping their employees insurance benefits in place. Then, I would guess that Republicans are doing right by trying to repeal the full implementation of legislation that nobody read so that more people can keep the coverage they had before the implementation of the "Affordable" Care Act.

  • Report this Comment On August 27, 2013, at 3:03 PM, starfish36 wrote:

    These and other companies will wince and whine --and eventually get used to the new health care law. So will the country, and the USA will be on track to universal health care coverage like almost every other developed country in the world. Anybody can get seriously sick or injured, lose his job or be unable to continue. Meanwhile, medical bills are the number one cause of personal bankruptcy in the USA. Everybody ought to be covered, and coverage should be mandatory.

  • Report this Comment On August 27, 2013, at 3:04 PM, j1rose wrote:

    if we pay for all americans , why nor go broke and pay for the rest of the world ??

  • Report this Comment On August 27, 2013, at 3:12 PM, organicdiva wrote:

    "Chances are that you don't have to look for very long to find articles or statistics that are critical of the health reform law signed into law by President Obama in 2010..."

    When one of the authors of this awful "train wreck" calls it a "train wreck," then yeah, this is true. This nightmare needs to be repealed. More people are losing their health insurance AND dental coverage because of this ridiculous bill. Why isn't anyone talking about people losing their dental coverage? Isn't that important too? And just like Congress and the rest of the elites who shoved this down our throats, we deserve to have a "waiver" too! Don't just give the rich folks waivers because they paid for your stupid campaign of LIES!

  • Report this Comment On August 27, 2013, at 3:15 PM, FoolishMark2855 wrote:

    Someone please explain to me why I must pay not only for my own health insurance, but for others health insurance as well. If those others can't afford it there is something available to them called charity. I work hard to put food on the table for my own family. My insurance rates are going up and I my family will not be eligible for any rebate. We are being penalized for making more than 4 times the poverty level. Insurance isn't a right anymore than eating is a right. Millions across the world have died of starvation. If Obama wants to penalize us then give the money to the poor and homeless, not to the insurance companies.

  • Report this Comment On August 27, 2013, at 3:16 PM, organicdiva wrote:

    It has been perfectly fine for YEARS for the poor to sign up for medicaid. Saying that certain people don't have "access" to healthcare was just another LIE on top of all the other lies. When the IRS continues their discrimination campaign against us, it will be too late then. Every prediction and previous concern we had about Obamacare has turned out to be validated. Too bad everyone else got duped.

  • Report this Comment On August 27, 2013, at 3:31 PM, Hjin wrote:

    Well, based on this one single story I can tell that nothing Sean Williams says should ever be taken seriously, particularly regarding investing. His research is superficial at best. His argument is incoherent. His logic is nonexistent.

  • Report this Comment On August 27, 2013, at 3:31 PM, workingmomof2 wrote:

    I am constantly amazed at the number of people who complain about everything! If you can afford insurance - consider yourself lucky and stop whining about helping out those who are less fortunate. The Affordable Health Care Act is not going away...deal with it!

  • Report this Comment On August 27, 2013, at 3:48 PM, kitdes wrote:

    Where is the information about the tax ramifications? Those with small deductibles, low or no co-pays with be paying income tax on these plans. For those that criticize businesses that cut insurance policies---our premiums increased 35% the month after Obamacare was signed. 35% increase again the following November. We didn't have the means to continue the insurance, gave our people a raise and told them to get their own insurance.

  • Report this Comment On August 27, 2013, at 3:53 PM, BeesHeaven23 wrote:

    OK, now lets go over this again on how insurance of all types work. When you buy insurance you are placed in to a pool of similar people and/or entities. Expenses and claims are spread out among all members of the pool.

    No you are not buying and paying for your own health insurance! Insurance companies would have went broke and out of business years ago if they did that. You are buying in to a pool with other people in the pool sharing the costs.

    As well, other countries already have better healthcare plans and delivery systems than we do! No other country in its right mind would want us to cover their citizens too.

    US healthcare is great, has been for a long, that is if you can afford it. This is the real problem. Sure you hear about others coming from all over the world to get medical treatment, but they pay in cash and have the resources to do so.

    To bad that great medical care is not for US citizens?

  • Report this Comment On August 27, 2013, at 3:59 PM, BeesHeaven23 wrote:

    By the way, Medicaid only covers the very poorest of US citizens. There is a gap in which people do not have access to Medicaid because they make too much, but can not afford or do not have employer sponsored healthcare insurance.

    This is the gap we are trying to close with the healthcare law.

  • Report this Comment On August 27, 2013, at 4:00 PM, RD240 wrote:

    I find it interesting how much focus is on "Obamacare" and how much mention or focus on the health care industry including HMOs, hospitals, physicians, pharmaceutical companies is avoided or ignored. This industry is the second highest campaign contributor to our blessed representatives and senators, and has more lobbyists than members of Congress. It becomes pretty obvious why there is that much influence being placed on this group that represents us. Why is it that people are not disturbed by the outrageous costs of health care and think about who's interests these people are caring about...get real. Of course there are problems of

    "Obamacare", but something has to change. The situation, as it exists, is not good. We end up paying more than our share anyway, especially in emergency rooms where people are force to go without some provider care.

  • Report this Comment On August 27, 2013, at 4:30 PM, johnnya2 wrote:

    1. UPS is only cutting insurance to spouses who have access to insurance through their OWN employer. That seems fair. Why should UPS subsidize another companies employee benefits? If your spouse works for FED EX and you work for UPS, it could mean UPS is helping its main competitor.

    2. @jehedden "I see no need to subsidize some other person, not just for health insurance but for anything. ". Ok I see no need to subsidize roads YOU drive on, fire fighters i never use, schools for children I do not have or military programs I do nto agree with. As for those that may not be able to afford insurance, I suppose you carried your own insurance prior to the time you were 18 and paid it on your own? If you say you did , you are a liar, no insurance company could allow you to enter a contract with them. I will also point out that it is great that YOU have no preexisting condition that limits your ability to get insurance, but let;s say you EVER had cancer, or maybe the insuranc company sees your parent had a cancer once, so they decide that makes you high risk?

    3.@ Organic diva "Saying that certain people don't have "access" to healthcare was just another LIE on top of all the other lies" Just not factually correct. There are MANY people who make too much to qualify for medicaid, but not enough to afford insurance. They are called the working poor.. I guess they do not exist in your teabagger world.

  • Report this Comment On August 27, 2013, at 4:53 PM, anounymous wrote:

    Those people trying to jump ship and to abandon their employees and republicans anyway. The rest of the world wonders what is wrong with us. We use to have the best medical care, now we rank number 37. 37!! OOPs, just double checked and we are not number 38! Costa Rica, Columbia, Italy are all ahead of us in health care for their people. Shame on us.

  • Report this Comment On August 27, 2013, at 4:57 PM, Booman49 wrote:

    Sean, Do you always report half truths? Do you even read the comments on your articles? Obviously not or you would do better research on your topics in advance of making half truth statements. Johnnya2 on his point #1 said it best.

  • Report this Comment On August 27, 2013, at 5:39 PM, nokaoi4u wrote:

    so ATT started charging for their health plan which used to be free to non mgmt employees, next year we get another raise and right now it is near impossible for most employees to keep up with it. Mgmt has to pay even more....lowers our pay by about 20%....we haven't had a raise in 3 years because of this.

  • Report this Comment On August 27, 2013, at 6:02 PM, MartyTheCanuck wrote:

    The goal of everybody having access to healthcare and health insurance is laudable.

    But the trouble with health "insurance" is that it is not really insurance, more a form of third-party, prepaid plan. This problem predates Obamacare. People should be insured for catastrophic events, like major diseases and traumas, not for regular medical visits, for an otitis or a rash, or for contraceptives. And that coverage should be dissociated from your job, so you keep it even if you lose your job. Then your insurance kick in when you run into HIGH cost, like above 2000 or 5000$ a year.

    Obamacare as it is is a monstrosity who compounds that problem. Simplistic in its ways ( you want everybody covered so you make it mandatory ! ) but terribly complicated in application.

    And please don't blame companies, working in a very competitive environment, for deciding what they can afford to pay. Government doesn't face competition, it's a monopoly who makes the laws.

  • Report this Comment On August 27, 2013, at 6:27 PM, mike5196 wrote:

    So UPS made this move "in lieu of Obamacare". that would mean that by making the move UPS would not have to participate in Obamacare.

  • Report this Comment On August 27, 2013, at 6:36 PM, gumby68 wrote:

    See so it is just the ones who could care less about employee's and more about not spending any money to help them.

  • Report this Comment On August 27, 2013, at 6:48 PM, JackTroy wrote:

    Health insurance is vital so I congratulate these companies. You can't do without car insurance either so I assume these companies will lead the vanguard on that too. And life insurance....can you imagine losing a spouse and getting thrown out on the street because you can't pay the rent? They should pay that too if they don't already...oh and while they are at it they should just pay your rent because there are few things more important than having shelter. If you have to pay utilities, well, do these fatcats know what it's like to sit in the cold or heat, the bastards? They should pay electricity and phone because...do I have to even point out how important those items are too? And while they are at it I could use a pizza right about now..........

  • Report this Comment On August 27, 2013, at 6:49 PM, drmaddogs wrote:

    Somewhat unusual or specific condition companies mentioned. Costco makes most of its profits from revenues of Membership, UPS has about the best Union/Management marry-up (wages versus profits) and Restaurants can have lower wage costs due to dear Mr. Herman Cain's successful lobby efforts to limit 'servers' wages.

    "Doing Right" for these companies entails having a small but expensive (high volume) purchasers,

    workers that earn every cent they are paid and poorly paid workers getting 'Benefits' to make up low wages.

    Three paradigms where most Americans do not work.

    On the other side, hundreds of companies reduced staff and cut hours. Three companies, an economy, does not make. Looks to me we've entered a time like the French and Japanese did, never to return.

  • Report this Comment On August 27, 2013, at 7:53 PM, serioso777 wrote:

    What ? 3 more companies based themselves in Panama ? You mean like the rest of them do so they don't have to pay taxes on the money they make in the USA ? Talk about pirates...that's how to steal America's wealth away....and steal American's wealth away...no wonder American's are poor, and that;s just 1 example of many...work hard may ass...they been telling the peasents that since their births...let me know how that working hard for 1970 wages, 2013 prices, work out for ya...

  • Report this Comment On August 27, 2013, at 8:33 PM, aazzous wrote:

    Considering that I am one of the 15,000 people effected at UPS with this change. The reality is that I will actually save money next year and will still be able to have my whole family including my wife on dental and vision. The only part she will not be allowed on is medical. Her work actually provides a medical policy just a great at a little bit of a lower cost. If she decides to stop working then I can add her back onto the medical policy. The author is really making a big deal out of nothing and I'm curious how the number 25% came to light. Considering UPS has about 400,000 employees and 25% of that would be 100,000 people. I'm guessing he knows more than I do... UPS has great benefits and has definitely taken great care of me and my family.

  • Report this Comment On August 27, 2013, at 9:23 PM, roger142 wrote:

    There has got to be more to Stryker laying off 5% of its work force than a 2.3% tax? Medical companies like them have a big mark up on their products, and like all other companies could just pass that cost on to us. After all, more people will have insurance and can afford it.

  • Report this Comment On August 27, 2013, at 9:30 PM, mazzmazz wrote:

    This is such a one sided article. Perhaps the companies cutting health care give higher raises,more vacation and starting pay to employees. I have my own business and to think that a business that all of the sudden "has" to pay health care is not going to recoup the money else where is just foolish.

  • Report this Comment On August 27, 2013, at 9:39 PM, myamerica wrote:

    Before ACA Americans paid for healthcare for the working poor by subsidizing their very expensive trips to the Emergency Room--because they have to be treated there. Poor Americans have Medicaid. A 25 yr old non-college student working two part-time jobs had no coverage for broken arms or accidents. God forbid if they got some major illness. Now, they will be using their own incomes to purchase insurance. It's cowardly for businesses to cut hours and cut employees. After this initial feet-stamping, the children will come out of their rooms because they will either close their doors or hire more people and insure them, because customer service will suffer. Funny, you don't hear about small businesses like law firms, doctors offices, dentists, who pay their people significantly more money, complaining and planning to cut employees--just the ones who pay people minimum wage or less...

  • Report this Comment On August 28, 2013, at 2:36 PM, todamo13 wrote:

    Obamacare doesn't solve the big problems- crazy, mind-blowing profiteering by the hospital corporations, device manufacturers, Big Pharma, and the insurance industry (there's a reason for the army of lobbyists). Until we accept that for-profit health care doesn't lead to good outcomes, we will continue to have super-expensive, yet mediocre, 'health' care that only a segment of our population can even afford.

    But it does some good things. I already got a check back from my insurance company because of a really good stipulation created by Obamacare: at least 80% of principle paid by the insured has to be used for providing ACTUAL HEALTHCARE. So executive bonuses, marketing, etc can't exceed 20%. My insurance company only used 75% of principle on providing healthcare, so it had to give rebates.

    This is great, relatively speaking, but compare this 20% maximum overhead to the 1% to 2% overhead of Medicare...

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