House May Vote on 40-Hour Workweek for ACA Coverage Later this Year

Senate also must vote to change the health care mandate's definition of a full-time employee

Stephen Miller, CEBS By Stephen Miller, CEBS September 14, 2018
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updated on September 25, 2018

Ever since the Affordable Care Act (ACA) was enacted in 2010, employers have wanted to change its definition of a full-time worker. The act stipulates that employees who work 30 hours or more per week (not the traditional 40 hours per week) are full-time workers and must be offered ACA-compliant minimum essential health coverage. Congressional action on this part of the employer mandate may finally be near, at least in the House.

The House Rules Committee met Sept. 12 to prepare the Save American Workers Act (H.R. 3798). The House is expected to vote on the measure after the November midterm elections, House Ways & Means Chairman Kevin Brady (R-Texas) told the Washington Examiner.

The legislation governs so-called applicable large employers, those with 50 or more full-time employees or the equivalent in part-time employees' hours. The bill would:

  • Establish a 40-hour workweek for determining full-time status. Applicable large employers can be assessed fines for not offering medical coverage to their workers. The proposed change would eliminate penalties for these employers that don't offer coverage to employees working less than 40 hours but more than 30 hours per week.
  • Suspend the ACA's employer mandate for 2015 through 2018. The practical impact of the proposed suspension is to eliminate penalties for employers that previously didn't comply. Passage would halt the IRS's current attempts to enforce the mandate and open the door for employers to obtain refunds from the IRS for any penalties already paid.
  • Further delay the "Cadillac tax." The 40 percent excise tax on employer coverage that is considered expensive was originally slated to apply beginning this year, but it has been delayed many times. This newest proposal would make the tax effective in 2023 instead of 2022.
  • Modify ACA reporting requirements. Employers now must provide IRS Form 1095-B for fully insured group plans to employees who receive ACA-compliant coverage, or Form 1095-C for self-insured group plans, to be distributed annually by Jan. 31. The proposal would make these disclosures necessary only when an individual covered by the plan requests a form. Annual reporting to the IRS would still be required.

Elusive Reporting Relief

"By raising the full-time threshold from 30 hours per week to 40 hours per week, employers wouldn't be required to offer coverage to as many employees, and employers would therefore have to report on fewer employees—easing the burden on the employer," said attorney Arthur Tacchino, principal and the chief innovation officer at SyncStream Solutions, a benefits-compliance technology firm. "However, it's important to note that this legislation would not alleviate or eliminate the requirement of the employer to track their employees."

Employees shouldn't overestimate the relief they'd receive from the bill's reporting changes, advised Scott Behrens, vice president and director of government relations at Lockton Companies, an employee benefits broker and consultancy. Applicable large employers "would still have to separately report to full-time employees [upon request] and to the IRS that they complied with the mandate," he said.

A different bill, the Commonsense Reporting Act (H.R. 3919), introduced last year, would provide more substantive IRS reporting relief for employers. GOP leaders have not scheduled action on that measure, however.

"The Commonsense Reporting Act legislation would provide greater relief for employers related to the ACA reporting aspects of the law," Tacchino said, but some are concerned that "without mandatory reporting, it's unclear how the IRS would determine noncompliance and implement and collect penalties."

[SHRM members-only how-to guide: How to Use the Look-Back Measurement Method to Determine Full-Time Status Under the Affordable Care Act]

SHRM's Support

The Society for Human Resource Management (SHRM) "supports legislative proposals that will help employers comply with the ACA," said Chatrane Birbal, SHRM's director of congressional affairs for health and employee benefits policy. "As such, we support the Save American Workers Act. SHRM has long advocated for these proposals, which will provide employers with greater flexibility to design benefit offerings that meet the needs of their employees and more opportunities to implement innovative health care solutions for their workforce."

SHRM also supports the Commonsense Reporting Act.

What's Next?

The full House of Representatives is expected to vote on the Save American Workers Act the week of Sept. 24. "Given that the House Rules Committee usually does not take up legislation that will not pass in the House, we should anticipate that H.R. 3798 will be passed by the House when it is considered," said bill supporter William F. Sweetnam Jr., legislative and technical director at the ECFC, formerly the Employers Council on Flexible Compensation, which advocates for tax-advantaged benefits programs.

The timing of Senate consideration of this bill, however, is unclear, Sweetnam said, especially since the Senate has not yet scheduled any consideration of the other health care bills passed by the House in July. "Nevertheless, the provisions of all of these bills could be in the mix in any larger legislative package that the Senate will consider this year," he noted.

Behrens, more pessimistic about the measure's Senate prospects, predicted that the coming midterm elections "will make it politically risky for the Senate to vote on changes to the ACA."

In the Senate, where the GOP majority is razor thin, opponents will argue that fewer people receiving coverage through an employer will shift the burden to the federal government to provide subsidized coverage through the ACA exchanges or Medicaid, further straining the federal deficit, Tacchino said.


Refresher: ACA Penalties

The Affordable Care Act's employer shared-responsibility penalties apply to any month in which at least one full-time employee of an applicable large employer receives a premium tax credit for purchasing coverage through the ACA marketplace if the employer:

  • Does not offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents—the Section 4980H(a) penalty.
  • Offers minimum essential coverage to at least 95 percent of its full-time employees and their dependents but the coverage offered is unaffordable or does not provide minimum value—the Section 4980H(b) penalty.


Related SHRM Article:

Be Ready for More ACA Penalties, SHRM Online, August 2018


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