Ivy Tech Community College President Tom Snyder testified before Congress this week on the effect the Affordable Care Act’s employer mandate is having on their employees, explaining the financial burden the college is facing.
“Like many community colleges our funding does not allow us to absorb large unfunded mandates such as any employee who exceeds 30 hours being offered health insurance,” he says. “The impact to us would be between $10-12 million.”
Because of that cost, Ivy Tech, like many other businesses and schools across the country is cutting part time hours to avoid paying health care benefits.
How The Affordable Care Act Defines ‘Full-Time’ Workers
Heather Turner spends her days as an instructional assistant at Edgewood High School in Ellettsville, keeping her special education students on task and helping them complete their work.
But this month, her days got shorter. She’s now here just 29.5 hours a week.
“Like I said, if we’re in the middle of something, and I’m helping the teacher with the classroom, and I have to leave in the middle of it,” she says. “That leaves it all to them and whatever I was doing is just kind of thrown up in the air.”
It’s not just Turner. All part-time positions in the Richland-Bean Blossom School Corporation have been cut to 29.5 hours because going up by just half an hour means those jobs would meet the Affordable Care Act’s definition of a full-time job.
Under what’s being called the employer’s mandate, employers have to provide healthcare benefits to full-time employees.
The mandate’s effective date was delayed from this month to January 2015, but because many schools and businesses had already planned to cut back on hours, they still implemented the new policy.
“It’s a sad thing that we have to limit good people on those things, but like I said, being a public institution, we have a set budget and we have to live within that,” says Mike Wilcox, Richland-Bean Blossom School Corporation Superintendent. “Good, bad, right or wrong, that’s where it ends up.”
Opponents of the ACA say what’s happening at Richland Bean Blossom illustrates a problem many businesses are facing. They say the 30 hour rule incentivizes employers to cut part-time hours to avoid paying healthcare benefits.
However, Indiana University Maurer School of Law Professor David Orentlicher says that it’s not quite as widespread as reports might make it seem.
“What we’ve seen so far is there have been anecdotes,” he says. “People said, my employer dropped me to 29 hours. Or, I got a new job and they would only give me 29 hours. So clearly that is happening. But when you look over the whole economy, so far we are not seeing a major effect. We are not seeing a big shift from full-time workers to part-time workers. We’re not seeing a slowdown in hirings…yet.”
What Lawmakers Are Doing To Change The Mandate
Last summer, Rep. Todd Young, R-9th, introduced a bill in the U.S. House of Representatives and Sen. Joe Donnelly, D-Indiana, introduced a similar bill in the Senate, that would raise the 30-hour cap to 40 hours.
In a statement Donnelly said that most Hoosiers think 40 hours, not 30 hours, is full time.
“We need to change the definition of a ‘full-time employee’ in the Affordable Care Act to bring it in line with what most Americans have traditionally recognized as full time,” he said.
Orentlicher cautions that raising the cap could create more problems. He says employers might cut 40-hour-a-week full-time employees back to 39 hours – making them part time and saving the company on insurance benefits.
“You want to minimize the gaming opportunities,” he says. “So changing the number of hours, people are still going to look for ways to work around that. It’s not the ideal solution.”
The mandate puts schools and universities in a particularly tough situation.
While corporations have a profit margin, educational institutions have fixed budgets and less flexibility to absorb increased costs.
Superintendent Wilcox says that raising the cap to 40 hours would relieve some of the pressure.
“That makes our building level principals and secretaries’ jobs that much easier, who schedule those things on a day to day basis,” Wilcox says. “And that makes my job and the board of trustees a little bit easier, that we don’t have to sit down with those folks and give them news that their hours are cut or remain cut, whatever the case may be.”
Orentlicher has another solution.
“One of the reasons why school districts and universities are stretched is because state governments have cut off funding,” Orentlicher says. “Maybe the solution is state governments should do a better job of funding.”