One closely watched aspect of the GOP’s latest effort to reform healthcare involves whether or not it would amend the definition of full-time employment for benefit-eligibility purposes, which stands at 30 hours a week under the Affordable Care Act. While progress is being made to repeal and replace the ACA, several Washington insiders suggest that benefit professionals and their advisers continue to comply with the employer mandate that includes the workweek rule.
Both the American Health Care Act, which passed the House in May, and Better Care Reconciliation Act currently before the Senate, do not explicitly address the 30-hour requirement, says Laura Kerekes, chief knowledge officer at ThinkHR.
If the BCRA passes, then the 30-hour rule will be null and void because that legislation repeals the employer mandate retroactive to 2016, according to Chris Condeluci, principal at CC Law & Policy, who once served as tax and benefits counsel to the Senate Finance Committee. He argues that any such retroactivity could even extend to 2015 “because the Obama administration never enforced the employer mandate, nor has the Trump administration.”
But if the legislation fails, then Condeluci says “the employer mandate stays on the books and the 30-hour work week rule remains in place unless, and until, Congress wants to change that rule sometime in the future.” He always advises employer clients to ignore all the noise related to ACA repeal-and-replace scenarios so they don’t run afoul of the law.
Suggested changes to the ACA that eliminate play-or-pay penalties “are a step in the right direction for employers offering group health benefits,” Kerekes says. However, she adds that the employer mandate, including requirements to offer affordable and minimum value coverage to full-time employees, will remain in place until repealed by legislation.
“Employers that decide to drop or significantly reduce healthcare coverage would be required to comply with ERISA notification rules for coverage changes, she adds.
While ERISA violations can trigger Labor Department investigations and class-action lawsuits by employees, the 30-hour workweek rule “doesn’t have an ERISA counterpart, which means that if the penalty is zero, then that’s the same thing as there not being any penalty in the tax code,” explains Roberta Casper Watson, an ERISA attorney with the Wagner Law Group. “And since there’s no affirmative requirement in ERISA, then that’s basically the same as there not being a requirement.”
She says the current draft of the BCRA zeros out the penalty tax for noncompliance with the employer mandate. Given the removal of this penalty, she surmises most employers would determine “that’s close enough to repeal for their purposes.”
A taxicab company Watson has worked with that wasn’t enthusiastic about offering such coverage probably might be happiest about the penalty being removed among her employer clientele. Others who might breathe a sigh of relief include the restaurant industry, she adds.
But the time to uncork champagne bottles could be far down the road if Republicans have their way on health reform.
“The elimination of the applicable large employer penalties gives those employers more choice regarding whether to offer ACA-compliant group health insurance to full-time employees,” Kerekes says. “Employers will need to consider how their group health and other benefits packages fit into their overall company culture as part of their talent acquisition, employee engagement and retention strategies. It is likely that employers will continue to offer their existing benefits coverage until the new law for ACA repeal and replace is finalized.”
In addition, she notes that both Senate and House versions would need to be reconciled by a Congressional joint committee, which could take some time.
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