Part-Time Staff Hours In Flux Due To Obamacare
May 31, 2013 Gary Morton and Patrick Sullivan
Officials of the Mental Health Association of Morris County fret about how The Patient Protection and Affordable Care Act (ACA) known as Obamacare might affect its operations beginning next year. They’re having trouble with how to meet the law’s implications — including what will be required of the association under the shared mandate for employees’ health insurance.
The challenge is that the rules keep coming. “We’ve never seen so many balls up in the air at once,” said Louis Schwarcz, president and CEO of the Mountain Lakes, N.J., organization. That makes planning tough.
Challenges to various aspects of ACA, the use of healthcare “exchanges” set up by individual states or — if the state declines — the federal government, concerns caused by the designation of 30 hours a week as full-time employment making an employee eligible for health care benefits, and numerous tweaks and interpretations of what the law means complicate matters. Nonprofits, colleges, universities and even trade associations that offer health insurance plans must comply with the legislation.
“The unfortunate thing with ACA, there’s hardly a day goes by that something’s not being tweaked,” said David Brownlee, vice president for human resources and risk management at Newman University in Aston, Pa. “There’s a lot of nuances to ACA that you have to be aware of.”
One thing is certain, in January 2014 large employers will have to provide health care benefits to full-time employees or face fines, according to the ACA. The Community College of Allegheny County in Pennsylvania announced late last year that it would cut the hours of adjunct professors and some other part-time employees to ensure they did not become full-time employees under ACA guidelines. Had the college not taken that action, officials said at the time, the college could face a $6 million hit under ACA.
College spokesperson David Hoovler said approximately 400 employees have been affected, and about half of those are adjunct faculty. The college capped adjunct faculty members’ credits per semester at 11 and 25 hours per week for non-faculty part-time temporary employees. To offset the cut in hours and credits, the college raised pay for all 2,200 adjunct faculty members by $20 per credit, to $750 per credit, as well as a “similar percentage increase to hourly wages” for the other temporary part-time employees affected by the hour cut, according to Hoovler. He said the college also extended coverage to about 35 permanent part-time employees.
“Of course, the college’s preference would be to extend coverage to all the employees affected,” said Hoovler. “Unfortunately there was just no way we could afford extending health coverage. It would have cost $6 million, and that’s simply unaffordable.”
That issue does not concern Newman University, where most adjunct professors teach only one or two courses per semester, which would leave them below the full-time threshold, Brownlee said. But university officials had to shoot in the dark a bit when planning the budget for the next academic year. Using the best information available, Newman officials budgeted an increase for healthcare benefits that they believe is enough to meet ACA guidelines.
“We believe we will be in full compliance,” Brownlee said. “Our goal is to provide employees a quality health care plan but still be in compliance with ACA.”
Colleges and universities face a dilemma in that they “are asked to keep costs down, but with this and other mandates it’s hard to do that, especially when you’re a small, private university,” Browlee said.
Even universities that are already in compliance with the 30-hours-a-week provision might need to re-examine their insurance policies. The University of Texas at Austin already grants benefits for employees who work more than 20 hours per week. “We’re having to do an evaluation for the length of employment,” said Adrienne Howarth-Moore, director of human resource services.
UT-Austin requires people be employed for at least 135 days before they are eligible for benefits, 45 more than ACA mandates. The university is undertaking an evaluation to determine how best to implement the change in waiting period. Howarth-Moore expects to be finished by the time the ACA takes effect in January. “We have no immediate plans to change the current level of funding (of health benefits) for our workforce,” she said.
Also at issue for UT-Austin are variable-hour employees. Howarth-Moore said the university has an easier time figuring the hours of non-faculty employees. “Faculty are not tracked by the hour,” she said, but by the courses they teach, and courses vary greatly in preparation work. “If you’re teaching an undergraduate course that’s fairly stable, you’re not likely to have a lot of change in terms of curriculum,” she said. “But for courses like economics or current affairs, that type of prep work the faculty may need can be extensive. That’s where we’re challenged.”
The University of Arizona in Tucson will also have to pay closer attention to those workers termed variable-hour employees, said George Humphrey, interim assistant vice president for communications. Like UT-Austin, the University of Arizona gives benefits to employees working at least 20 hours a week. “While the Affordable Care Act’s 30-hour-a-week requirement will not affect us, the requirement to provide coverage to variable hour employees will require us to limit the number of hours our temporary employees may work during the course of a year,” said Humphrey. He said about 500 employees will be affected, but declined to speak about what sort of employees or further about an hour cap.
Both Howarth-Moore and John Brooks, spokesman for North Park University in Chicago, wish the ACA requirements were more clear. “The IRS says that employers must make a reasonable estimate of their employees’ hours. What we have to figure out now is, what’s reasonable?” said Howarth-Moore.
“All schools are struggling with this issue, and like our colleagues, we are awaiting clarity from the IRS. We have not yet determined North Park University protocols related to health care coverage, but we are working on this in the absence of definitive direction,” Brooks said.
“Our colleges are very anxious to get guidance from the government in this regard,” said David Baime, senior vice president of government relations and policy analysis for the American Association of Community Colleges (AACC) in Washington, D.C. “In isolated cases, (our members) are changing hours” for adjunct faculty, which community colleges employ in large numbers, said Baime. “They’re simply ensuring that their current policies toward adjuncts are in compliance with the law.”
Baime said the AACC is recommending members be as explicit as possible about how they will comply with the law, but there’s not much they can do without firm guidance from the IRS. He said that many community colleges have not yet taken any steps to ensure compliance with the ACA, both because the law does not go into effect until Jan. 1, 2014 and because the IRS has not yet issued guidance. “We’re hopeful (guidance) will be coming this summer,” said Baime. “It’s frustrating. I know the treasury has an enormous burden in terms of all the ACA implementation, but it’s creating a lot of difficulty on our campuses.”
Colleges such as the Community College of Allegheny County are only acting in their best interests, according to Baime. “They’re balancing a lot of different variables, and they seem to be getting a lot of bad PR for simply trying to comply with the law,” he said.
Organizations such as MHA of Morris County face what Schwarcz described as a “double whammy” since the act not only sets mandates for them as employers but could change how some care and services are provided and how reimbursements might be made.
Confusion regarding what ACA will require led a number of colleges, universities, nonprofits and associations to decline comment, saying it still is too early to know what the effect will be.
“There are obviously a lot of nuances to the law,” said Chris Vest, director of public policy for ASAE: The Center for Association Leadership. “There continues to be a lot of confusion in the nonprofit marketplace.”
ASAE has developed an ACA resource page on its website. It is www.thepowerofa.org/resources/affordable-care-act-and-associations. “We’re in the informational stage right now,” he said.
Providing specific information becomes difficult given the diverse range of member organizations, he said. “Some areas of concern for one type are not so important to others.” ASAE provided the resource page but “it is up to the specific organization to develop a strategy for being prepared for implementation. … It’s causing concern just from the standpoint that it’s a complex law with a lot of provisions that have many implications for many employers.”
Nonprofits “were probably not up to speed” on the act’s requirements on employers as the bill worked its way through Congress, Vest said. Now, even amid “some uncertainty in regards to the [legal] challenges of the law and when it goes into effect … everyone needs to get up to speed in a hurry.”
Employers must learn the implications of the shared mandate provision and options such as health care exchanges being set up in various states, and how that will affect the cost they must pay for employee health care, Vest said.
Part of the reason nonprofits have been slow in looking at how the ACA will affect their operations stems in large part from those same organizations pushing hard for the act’s “positive aspects,” said Andy Germak, executive director of the Institute for Families and a lecturer on Nonprofit and Public Management at Rutgers University in New Brunswick, N.J. “I believe there are many good aspects of ACA. However, I find that mostly nonprofit leaders are focusing on that aspect – the good – but not on the business end.”
Germak understands such thinking. Before he became executive director of the Institute for Families he was president and CEO of MHA of Morris County. He fears the ACA might financially cripple many medium-sized nonprofits (those with between 50 and 200 employees), and as a result mean less service to the communities they serve.
“It requires all employers to pay a portion of employee care cost and dependent care cost,” Germak said. When he was at MHA, “we used to pay a substantial amount of the premium for employees but we did not pay anything for the dependent care.” His understanding is that employers will have to pay 60 percent of premiums for dependent care. “Even those [nonprofits] that had been paying for dependent care had not been paying near that level.”
The strain on the nonprofit’s finances could trickle down to the service level, which might have to be reduced, Germak said. Such a move would place more demands on small nonprofits (less than 50 employees) and local communities to provide more services or deal with the consequences of reduced services
One way nonprofits can try to influence the impact on operations is to make their legislators aware of ACA’s implications, and try to amend the regulations to provide some relief, Germak said.
Schwarcz, Gerlak’s successor at MHA of Morris County, believes small to medium agencies are likely to be hit hard by the employer’s shared mandate. But that is only one of his concerns; other provisions might favor larger health care provides over smaller ones such as MHA. “It has implications for patient care,” he said, and might wind up favoring larger nonprofit and for-profit organizations compared to organizations such as MHA. “Would you rather get your health care from a mega-institution or a community-based nonprofit that knows and understands the community it serves?”
Like many others in the nonprofit sector, Schwarcz worries about what ACA will mean for MHA. “We all feel there is a risk to our operating capacity.” Given the lack of specifics, he does not know how to plan for it.
“The best way I can describe it,” Schwarcz said, “is that it is a perfect storm of uncertainty.” NPT