Senator Joe Donnelly Becomes First Democratic Cosponsor of Bill Changing “Full-Time Employee” to 40 Hours Under the ACA
June 24, 2013 08:36 AM
Senator Joe Donnelly (D-IN) joined with Senator Susan Collins (R-ME) earlier this week to support the “Forty Hours Is Full Time Act of 2013,” S. 701. Senator Donnelly becomes the first Democrat to sponsor the legislation, which would modify the definition of full-time employee (FTE) for purposes of the shared responsibility mandates in the Patient Protection and Affordable Care Act (PPACA).
Starting in 2014, the PPACA imposes a $2,000 employer penalty for each full-time employee - after the first 30 - where the business employs 50 or more full time equivalent employees, does not offer health insurance to all employees, and at least one of the employees qualifies for a federal subsidy to purchase health insurance. The definition of “full-time employee” in the calculation of target employer’s penalty is based upon the total of the number of employees working at least 30 hours a week.
S. 701 would change the definition of full-time employee to those working at least 40 hours a week rather than 30. This would affect both the determination of whether the employer is a “large employer” subject to the mandate and the number of employees for whom the employer would have to provide health insurance or pay a penalty.
These changes would be beneficial to home care agencies that are unable to provide health insurance and are thus subject to the penalties. The legislation would also result in a definition of “full-time” that is more in line with current employment practices related to qualifying for health insurance.
In a letter Senators Collins and Donnelly sent to President Obama, they explained the rationale for changing the definition of a full-time employee under the ACA stating that:
“Under the ACA, a full-time employee is defined as an individual who works an average of at least 30 hours per week. This definition, however, is inconsistent with the traditional description of a full-time 40-hour work week, and coupled with the proposed rule’s application and other employer responsibilities, has caused significant confusion among employers who are struggling to understand and comply with the new requirements.”
The senator’s letter also states that, “perhaps more concerning are reports that uncertainty surrounding implementation could serve as a disincentive for businesses and organizations to expand their workforce.”
In its Legislative Blueprint for Action, NAHC asserts that home care businesses with more than 50 full-time employees have three problems that are unique for employers impacted by ACA. First, home care is most often paid for by government programs such as Medicaid and Medicare. These programs do not normally raise payment rates adequately - or at all - to cover increased costs.
Second, the consumer of private pay home care is most often an elderly or disabled individual on a fixed or low income who cannot afford to absorb any additional price increases that would be needed to cover the cost of employee health insurance or the alternative penalty.
Third, the home care workforce is often employed with widely varying weekly work hours because of the constantly changing home care clientele and the always changing needs of those who require home care services. The model defining FTE in the current law does not accommodate these variations.
NAHC has called on Congress to exempt home care providers from the PPACA employer responsibilities, provide a subsidy to all home care providers to supply health insurance, and/or provide a subsidy or tax credits to home care clients to cover the increased cost of care triggered by the employer responsibility provisions. Congress should help the states ensure that low-wage home care workers have health insurance through Medicaid or otherwise.
Congress should amend PPACA to require that all government health programs adjust provider rates to meet the additional costs that will be incurred by health care providers to make health insurance available to all their employees. In addition to expanding the definition of full time to 40 hours a week as called for by S. 701, Congress should also amend PPACA to allow for a definition of a full-time employee that evaluates the individual’s working hours over a 180-day period rather than the current monthly calculation.
To read Senator Collins and Donnelly’s full letter to President Obama, please click here.
To urge your senators to become cosponsors of S. 701, please click here.