By Ryan Ekvall | Wisconsin Reporter
MADISON, Wis. — School districts throughout Wisconsin have some tough decisions to make about mandatory health care for their part-time employees.
The Affordable Care Act, or Obamacare, requires employers with more than 50 full-time workers offer Health and Human Services-approved health insurance to all employees working more than 30 hours a week.
Failure to do so could result in fines that could run into the millions of dollars for institutions that employ hundreds or thousands of workers.
School districts have a choice of laying off or reducing the hours of teachers, aides and substitutes that work more than 30 hours but less than 40 a week, or offering the same health care coverage at the same cost as they do full-time staff.
In March 2013, Mike Nault, human resources director at the Oshkosh School District, offered part-time teachers in the district an ultimatum.
“If you want health insurance July 1, 2014,” Nault told them, “then you need to look for full-time work with us.”
A postponement gave the district a temporary reprieve, Nault told Wisconsin Reporter. “Then I thought ‘OK we’re not going to change anything for a year.’”
With the changes and delays, the Oshkosh district, the 11th largest in the state, may be able to keep the status quo for another year, Nault said. There are still “too many variables” to know what will happen in 2016.
Pat Flaherty, assistant superintendent of human resources in Sheboygan, the state’s 10th largest school district, said while the district was still working out its plan, “We said we can’t afford to be giving part-time folks full-time benefits.”
Many school districts offer health insurance to part-time teachers and teachers’ aides who work nearly 35 hours a week. Prior to 2011, Sheboygan paid for full health insurance benefits to part-time employees.
Flaherty said he thinks the district would lose valued employees if it simply cut hours below 30 per week to avoid the Obamacare requirement. Both Sheboygan and Oshkosh school districts employ more than 200 people who meet this distinction.
“We’re still trying to work out how to be compliant,” Flaherty said. “We don’t want to say ‘OK everyone above 7.25 hours (and under 40 hours a week) we’re going to reduce your hours.'”
Employees in Wisconsin who work less than 30 hours a week are eligible for subsidies through the federal Obamacare exchange, but only if their employer doesn’t offer health insurance.
School districts took large funding cuts from the state with Act 10. Employees, however, had to pay into their own pensions and health benefits for the first time, which refunded a substantial portion of the cuts.
The school board, freed from requirements of the previous collective-bargaining agreement, instituted a pro-rated model. The district would still offer part-timers health insurance, but at an increased cost to the employee.
Where Act 10 cut funding but added certainty for school boards in Wisconsin, the ACA may increase costs and has created uncertainty.
“Is pro-ration still fair under this?” Flaherty asked. “It’s not definitive what they’re telling us we need to do. Frankly, they can roll back again and give us another year to get this resolved.”
Districts also have to contend with supposedly forthcoming “non-discriminatory” regulations that were never written after the law passed. That part of the ACA fines employers that offer health insurance that’s deemed to more greatly benefit the top 25 percent of earners in a company. In schools, that includes administrators and teachers with seniority.
“Employers have been waiting for more than a year for the publication of regulations by the Internal Revenue Service that will address this question,” lawyers at the Boardman Clark law firm in Madison wrote in December. “However, the amount of the penalty for violating the non-discrimination provisions has been made clear: the penalty will be $100 per day per non-highly compensated person discriminated against.”
The law firm recommended school districts keep contract language regarding health insurance flexible enough to revisit with higher paid staff, if necessary.
Nault said the non-discriminatory regulations could make prorating insurance impossible.
The Obama administration’s one-year delay on the employer mandate last July also allowed employers to phase in coverage by offering a health plan to 70 percent of their full-time employers in 2015, which will rise to 95 percent in 2016. This gives larger school districts some leeway for making changes without getting hit with fines.
“We don’t want to jump out and do something and impact our employees today, and then something changes and they may not have had to be impacted for a year or two or three or four,” Nault said. “We don’t want to get pinched with a $2 million fine, either.”
Contact Ryan Ekvall at [email protected], at 608-257-1382 or on Twitter @Nockian.