A past issue of PPACA Watch discussed how to determine if substitute teachers are considered full-time employees under the Affordable Care Act (ACA). But what about other staff who may work 30 hours during the school year, and may or may not work during the summer break? ACA has a special rule for educational organizations like yours. Not being aware of this special rule may cause a failure to identify full-time employees, potentially triggering a penalty.
Applying this special rule and other provisions of ACA may increase your costs. The first step to mitigate these potential cost increases is to determine which employees you will be required to offer "Affordable" health insurance coverage. Only after that can you determine which savings strategies to put in place.
A Special Rule For School Districts
ACA defines a full-time employee as one that is expected to work 30 hours or more per week (or average 130 hours a month) for a minimum of 120 days in a year. However, for educational organizations, there is a special rule that takes into account breaks of at least four consecutive weeks, such as summer vacation. Therefore, school districts must either exclude summer vacation when determining average hours or consider “crediting” employees with average hours during the break for purposes of determining full-time status.
Any employee who works or is expected to work 30 hours or more per week for nine months during the school year should be considered a full-time employee and must be offered affordable health insurance coverage.
- Math teacher John works 30 hours a week or an average of 130 hours a month all year long, with less hours during the summer break. John should be considered full-time.
- Lisa, newly hired as a school administrative assistant, works 30 hours a week or an average of 130 hours a month leading up to the summer break, but does not work during the break. Lisa should be considered full-time.
- Jacob, a college student, works for the district only during the summer break of three months for 40 hours a week. Jacob is not considered full-time.
Using the Look-Back Method to Identify Full-Time Employees
The Look-Back Method was introduced as a “safe-harbor” to help employers determine eligibility under the 30-hour mandate.
- Gather a list of employees in question. To compile the list, consider using existing data such as W-2’s or reports that are used to determine state retirement eligibility based on hours. Include college students or school age workers who work full-time during the summer as well as substitute teachers or part-time workers who come in less than 3-days a week.
- Establish a "measurement period" for current employees by looking back at the employee’s hourly history in the past 3-12 months. Note: Employer must choose a consistent period for all employees. If summer vacation occurs during the measurement period, remember to exclude the break or “credit” employees with average hours during the break period.
- Figure how many hours the employee worked per week during the measurement period. Note: Each hour that an employee is paid or entitled to payment should be counted even if no duties are performed.
- The average amount of hours worked in the “measurement period” is applied to the “stability period”, regardless of hours worked in the stability period. During the stability period, the district must offer benefits to all current employees who met the hour requirement in the measurement period (or pay penalty).
For more information, download our Legislative Brief: Identifying Full-Time Employees or visit http://www.groom.com/resources-734.html
Latest ACA Newsletter Articles
- ACA Expands Small Group Employer Definition
- 3 Takeaways from the King v. Burwell Supreme Court Ruling for School, City and County Employers
- 5 Ways to Bend the Health Insurance Cost Trend: Cadillac Tax Mitigation Strategies for Schools, Cities and Counties
- Bend the Trend: Cadillac Tax Mitigation Strategies for Schools, Cities and Counties
The ACA Watch newsletter and blog/website is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
© 2013 National Insurance Services of WI, Inc. All rights reserved.