FORT WAYNE – Indiana school districts face a bad choice and an equally bad choice under a proposed regulation in the federal health care law, according to a Fort Wayne Community Schools official.
Districts either would have to provide health insurance to many part-time employees – at an estimated statewide cost of $267 million – or cut work hours so those employees are ineligible for coverage, Kathy Friend said Tuesday.
The budget impact of providing health insurance to this class of newly eligible employees is devastating, said Friend, the chief financial officer for FWCS, at an Internal Revenue Service hearing in Washington.
Friend testified on a proposed rule that would require large employers to provide health insurance for employees who work at least 30 hours a week. The Patient Protection and Affordable Care Act defines a large employer as having at least 50 full-time employees and a full-time employee as one who works at least 30 hours a week.
In a transcript of her remarks, Friend urged the IRS to eliminate a provision that would prevent educational institutions from including employment breaks, such as summer vacations, when calculating employee hours. She asked that breaks of at least four consecutive weeks be part of the formula for determining weekly work hours.
The proposed regulation, called Shared Responsibility for Employers Regarding Health Coverage, is scheduled to take effect Jan. 1.
Friend told the IRS that FWCS employs 841 people – teacher aides, special education aides and cafeteria staff – who work 30 hours a week during the school year. Under the Affordable Care Act, the district would face a $10 million increase in insurance costs or an $8 million fine if it failed to provide coverage to those workers, Friend said.
If the regulation does not change, in order to avoid this dramatic increase to our budget, we would likely decrease the number of hours worked by these individuals where possible, she said. There is an overwhelming agreement by school business officials throughout Indiana that this is the only way to survive. This is not good for the employees in the positions or the students that depend on their support.
She said the Indiana Association of School Business Officials, of which she is a member, estimates the rule would cost $267 million a year statewide or $207 million in non-compliance penalties.
Under this proposed regulation, when considering what is possible with our budgets, we have to decide between a bad choice and an equally bad choice, Friend said.
The Chronicle of Higher Education reported Monday that colleges in four states, including Ohio, have begun limiting the work hours of part-time employees such as adjunct instructors in advance of the regulation. Hours worked in 2013 will determine who is eligible for health insurance in 2014.
The Chronicle reported the IRS had received 500 comments from the public on the regulation ahead of Tuesday’s hearing. An IRS document notes that several comments were submitted by teachers and school employees.