How many hours do employees have to work before they are considered full-time and eligible for health insurance plans offered by their employers? While there is not a one-size-fits-all-employers answer, the health care reform law's 30 hours per week definition has little if any correlation with real-world practices, where a 35- to 40-hour workweek requirement is common.
That congressional staffers got it so wrong when drafting the Patient Protection and Affordable Care Act is no small matter to employers and their employees.
That is because of the law's penalty on employers that do not comply with the 30-hour requirement.
Starting in 2015, employers that do not offer coverage to at least 70% of full-time employees — those working an average of 30 hours a week or more — will be liable for a penalty of $2,000 per full-time employee. In 2016 and succeeding years, the penalty will be triggered if fewer than 95% of full-time employees are not offered coverage.
Given this penalty and limits to corporate and public entities' budgets, the employer response to this requirement, as we report on page 1, is not surprising: They are reducing hours worked by employees they consider part-time and, as a result, do not or will not offer coverage to to employees working less than 30 hours per week to avoid the penalty.
Indeed, a Mercer L.L.C. survey reports that 10% of employers have, or will by 2015, reduce the number of employees working 30 or more hours.
Why employers are reducing employees' hours is obvious. At a time when group health care plan costs average more than $10,000 per employee, employers can't afford to extend coverage to employees they consider part-time, nor can they they afford to pay the PPACA penalties.
Fortunately, this is a problem for which there is an easy solution — if for once lawmakers can act on a bipartisan basis: change the health care reform law's definition of a full-time employee to one that more closely meshes with the real world.
While a 40-hour workweek standard proposed in legislation before the House of Representatives may be too high, a 35-hour workweek standard strikes us as fair and reasonable. We urge lawmakers to make such a change as soon as possible.