A major ACA mandate that will affects schools districts nationwide is the requirement for large employers to provide health coverage to all full-time employees. In the eyes of the new law, all employees who work at least 30 hours per week for more than 120 days per year are considered full-time.
This mandate concerns school districts in particular because most employ substitute teachers, many of whom are not currently offered health insurance. Employers who do not offer these employees coverage should direct their attention to the ACA requirement and work to create a compliance plan.
Please note that if you employ fewer than 50 full-time workers, as defined by the ACA, the mandate doesn’t apply to your organization and there is no need to worry about this requirement.
What action should you take and when?
The deadline for compliance is January 1, 2014 and the obligation to offer coverage begins 90 days after a full-time employee’s hire date. UPDATE: The date has been postponed to January 1, 2015.
The first step to addressing the mandate is calculating how many hours your substitute teachers work each week to determine whether they qualify as full-time employees, as defined by the ACA (see sidebar for instructions).
If you find that the substitute employees typically work fewer than 30 hours per week, you may consider putting requirements in place to ensure that this standard is maintained.
If you find that substitute teachers qualify as full-time under ACA, determine whether or not the district will offer them healthcare, keeping in mind the penalties associated with not providing them benefits.
One option for employers who prefer to avoid calculating full-time status or extending healthcare coverage is outsourcing substitute teacher employment to a placement service.
What is the penalty for not complying?
If employers fail to offer “minimal essential coverage” to all full-time employees, they face a penalty of up to $2,000 per year multiplied by the number of full-time employees not receiving coverage, with the first 30 employees excluded from the calculation.
What type of insurance do I have to offer full-time substitute teachers?
According to the ACA, you must offer insurance that is “affordable” and satisfies a “minimum value” requirement. If the coverage offered does not meet these standards and the employee is not eligible for Medicare or Medicaid, he or she will likely be able to purchase federally-subsidized health insurance on one of the benefits exchanges mandated by the ACA.
The penalty associated with this scenario differs from the fine for failure to offer coverage. In this case, the fine is up to $3,000 per year for every qualified full-time employee who obtains subsidized, exchange-based health insurance.