School districts around the state have breathed a little easier since the Obama Administration announced in July that it would delay to 2015 the new health care law’s mandate that employers with 50 or more full-time workers offer affordable health care coverage, or face fines. As reported in the Spring 2013 edition of Education News, with a law of this magnitude, school districts should immediately consider their options regarding their workforces before the employer mandate takes effect. The mandate’s delay makes this no less important.
Under the new health care law, known as the Affordable Care Act (ACA), school districts who are considered “Large Employers” – that is, those who employ 50 or more workers who, generally speaking, average 30 or more hours per week – will be required to offer medical insurance to all “full-time employees” and their dependants or face a stiff fine starting in 2015. Even though the hours worked by part-time employees count when determining whether a district is a “Large Employer,” the district is not required to offer part-time employees health coverage. While most Pennsylvania districts already offer insurance plans to administrators and teachers, workers in support roles may not currently receive benefits.
This article will address three common questions affecting school districts regarding their obligations under the new law.
Which employees are eligible for health coverage under the new law?
As stated above, the district is only required to offer health coverage (or pay a penalty for not doing so) to “full-time” employees. “Full-time” employees, for purposes of determining which employees are eligible for health coverage, are those who average at least 30 hours of service per week. “Hours of service” is defined to include not only hours actually worked by the employee but also hours for which an employee is paid or entitled to be paid by the employer due to vacation, holiday, sick leave, incapacity (disability), jury duty, military leave or other leaves of absence.
Some district employees are not required by law to keep timecards and are not paid on an hourly basis, so districts may not be certain how many hours these employees work.
Administrative guidance gives employers the option to select one of three methods for determining whether an employee is considered full time under the law: 1. Counting the actual hours worked; 2. Assuming eight hours of service for each day that the employee works; or 3. Assuming 40 hours of service for each week the employee works. If the district does not know whether an existing employee works an average of 30 service hours per week, the district may use a “look back” or measurement period of 3 to 12 months to make that determination.
How does the district calculate the hours of service if the employee does not work over the summer or if the employee has taken authorized leave?
School district employees who otherwise would be considered full time under the 30-hour standard may not be penalized for unpaid summer breaks if they work for an educational institution, unpaid leave under the Family and Medical Leave Act (FMLA) or unpaid jury duty.
Under current guidance, when determining whether ongoing employees are full-time, school districts must exclude employment breaks of at least four consecutive weeks (such as the summer break) from the calculation. Alternatively, the district may credit the average weekly hours the employee previously worked for the weeks during the summer break. The proposed regulations limit this credit to 501 hours. Either way, a paraprofessional who averages at least 30 service hours per week for nine months, but has no hours for three months, would still be considered a full-time employee of the district. Likewise, all employers must exclude periods of unpaid leave authorized under the FMLA or jury duty when determining whether an employee works full time. Alternatively, employers may credit, to those unpaid leave periods, the average weekly hours an employee previously worked.
Must the district offer health coverage to employees if the district does not reasonably know how many hours these employees might work in a year?
It could, but only if the employee ultimately works or is paid for an average of at least 30 service hours per week. In cases where the district does not reasonably know whether an employee will work at least 30 service hours per week, administrative guidance requires that employers use special rules for “variable-hour employees.” A variable-hour employee is an employee who works irregular hours so that an employer simply does not know or have any way of determining the number of hours the employee will ultimately work. Examples of school district employees that might fall into this category are substitute teachers, bus drivers that work extra-duty routes, personal care aides who are assigned to students who attend sporadically, or employees who take on extra duties outside the regular work day.
The ACA is complicated and contains many nuances and exceptions. The attorneys at MBM are available for further guidance on these and other questions relating to the ACA.