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OPINION: Congress needs to change the definition of a full-time employee

February 16, 2014 - 6:00am

Employer Health Care Mandate


The Treasury Department's rules dealing with the health care reform law's employer mandate are a good start, but should by no means be the last word on improving the Patient Protection and Affordable Care Act. Most significantly, as we report on page 1, the regulations shield for one more year many employers that do not extend coverage to nearly all their full-time employees from a penalty.

That penalty of $2,000 per full-time employee, which was to start in 2015, is imposed on employers that do not extend coverage to at least 95% of their full-time employees, which the law defines as those working at least 30 hours a week.

The penalty poses an especially tough issue for employers that do not extend coverage to employees working 30 to 35 hours a week because employers consider them part-time.

Employers could, for example, reduce the maximum number of hours part-time employees work below the 30-hour penalty trigger or they could extend coverage to those employees working at least 30 hours a week.

Those approaches, and perhaps others, could result in employers not having enough staff to meet customers' needs. On the other hand, extending health insurance to part-timers could cost more than an employer could afford.

Conducting an in-depth analysis of those and other approaches can't be done overnight. The administration wisely recognized that in its regulations. By allowing affected employers — only for 2015 — to extend coverage to as few as 70% of full-time employees without triggering the penalty, most will have the time to decide on the coverage approach that works best for them and for their employees.

While the regulations also provide welcome guidance elsewhere, there is only so much guidance regulators have the authority to provide.

Changes to the law can come only from Congress. An obvious one is changing the definition of a full-time employee. Bumping up that threshold to at least 35 hours a week should be a top priority for Congress.

 



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