Brokers and employers are applauding swift action taken by Congress this week to redefine a full-time employee under the Affordable Care Act from one who works 30 hours per week to one who works 40 hours per week.
The House Thursday, in a 252-172 vote, passed H.R. 30, the Save American Workers Act of 2015, which would rewrite the ACAs definition of a full-time employee.
See related story: House passes bill to amend ACA definition of full-time employee
Calling the legislation a common-sense fix, Charles Symington, senior vice president of external and government affairs for the Independent Insurance Agents & Brokers of America (the Big I) says the move would provide some relief for job creators.
Independent agencies serve many clients who have struggled with the implementation of the employer mandate, particularly the 30-hour per week definition of a full-time employee, says Symington. Implementation of the employer mandate has caused many businesses to face the prospect of great financial strain or contemplate dropping their health care plan altogether.
The work ahead
While brokers and employer trade groups are supportive of the change for the long-term, Ann Marie Breheny, senior legislative analyst for Towers Watson, says the change would add to the immediate workload of advisers and their employer clients.
A lot of the discussions and decision making that took place for the 30-hour work week would have to be re-evaluated for the 40-hour work week, she says. It would raise strategic and bigger decision-making issues as to whether [employers] want to change the provisions they have put in place to comply with the 30-hour work week.
For now, however, Breheny cautions that the 30-hours a week rule remains in effect and benefit advisers and their employer clients should proceed with business as usual.
Scenario-planning for a 40-hour work week rule is appropriate, she says, but the bill, which now moves to the Senate for consideration, still faces a bumpy road.
Were through the easiest hurdle, but the Senate is a different calculation, she says, adding that the President has also threatened to veto the bill.
Earlier in the week, President Obama issued a statement of administration policy saying he strongly opposes the legislation and will veto it, because it would increase the deficit, shift health care costs to taxpayers, reduce the number of Americans with employer-based health insurance coverage, and create incentives for employers to shift their employees to part-time work.
By moving the threshold to 40 hours, this legislation could cause the problem it claims to solve by greatly increasing the number of workers for whom employers may have an incentive to reduce hours to avoid the requirement, the statement says.
Employers and trade groups disagree.
Brian Marcotte, president and CEO of the National Business Group on Health, says the change to a 40-hour work week definition for full-time employees, will boost employment, increase opportunities for people working part-time to add hours, and help the economy, particularly for smaller employers and those employers in retail, hospitality and other service industries.
Marcotte says that 40 hours is a more common definition of full-time employment rather than 30 hours, especially among large employers and that the change would give employers and employees more flexibility in scheduling work hours.
Many employers are concerned that, despite their best efforts to comply, liability [under the employer shared responsibility rule] could be triggered, given the complexity of administering coverage to comply with the law, particularly with respect to employees who work a variable schedule, short-term employees (for example, 4-6 months), temporary, seasonal or similar contingent workers, says James Klein, president of the American Benefits Council.
In a letter to House leadership, Klein says, One helpful step Congress can take to alleviate these employer concerns is to pass legislation increasing the hours of service threshold for determining full-time employee status.
See related story: Push for ACA 40-hour work week definition heats up
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