Implementing the Affordable Care Act at Penn State, Employer Responsibility and the Part Time Employee; The AAUP Speaks, the IRS Regulations Are Released

(Pix (c) Larry Catá Backer 2014)

The Patient Protection and Affordable Care Act (PPACA) ― also known as the Affordable CareAct or ACA ― is the health reform legislation passed by the 111th Congress and signed into law by President Barack Obama in March 2010. The so-called employer responsibility provision of ACA (ACA § 1511 et seq.) must be implemented by all large employers, including Penn State, in 2014. The employer responsibility provisions primarily affect part-time faculty and staff. Employer penalties will be assessed if Penn State does not offer affordable health care to 95% of its employee population who meet the "full time" employee criteria of ACA.

The issue of calculating hours for part time employees, and the determinaiton of the provision (or no provisions) of benefits for part time employees remains very much a work in progress at Penn State, as it does for most large educational institutions across the nation. Penn State, in concert with its sister universities have chosen to adopt similar approaches for the determination of part time status, and for the benefits no longer available to that class of employee.

In the spirit of shared governance, university administrators determined that it would be useful and appropriate to solicit the input of faculty and others affected by the policy determinations that Penn State would be making with respect to these ACA requirements. The Penn State University faculty Senate obliged with a forensic discussion at its January, 2014 meeting (Implementing the Affordable Care Act at Penn State--Employer Responsibility Provisions and the Part Time Employee).

Here is a link to last month's Senate Record of the forensic discussion, conducted by Profs Larry Backer (previous Chair of the Senate) and Ira Ropson (Chair of Faculty Benefits Committee). The session may be accessed here: http://senate.psu.edu/record/13-14/012814/012814record1.pdf

At session's end, all interested stakeholder were urged to contact our Human Resources personnel and the Senate Faculty Benefits Committee to provide necessary inpiut to help guide the administraiton in choosing the approach it would take, within the limits of its discretion under the ACA, with respect to Part Time Employees.

Among those important stakeholders who have sought to contribute to the discussion has been the Penn State Chapter of the AAUP. This post includes the letter sent by Brian A. Curran, Professor fo Art History at the University Park campus, and president of the new AAUP chapter to Lori Miraldi, Lecturer in Communication Arts and Sciences, and forwarded to Dr. Ropson.

It also includes the gist of the new Treasury Regulations that permit much harsher treatment of part time faculty employees.

If the University chooses the easy path, it might wrap itself in the protections of the Treasury regulations and  create a substantial class of exploitable academics who would contribute to better operating margins for the benefits of students being outfitted for maximizing their value to wage labor markets.  But it might be possible for the University to protect its financial position and deliver quality sustainable instruction without the need for the sort of exploitation the state now would permit. It is to be hoped that Ms. Susan Basso, Penn State Vice President for Human Resources,  and her colleagues at other large public institutions, would take the higher road.  But that remains to be seen.

This is the letter from Dr. Brian Curran:

"Dear Lori,

Michelle kindly forward your e-mail to me regarding the ACA and its implications for part-time and fixed term faculty.

This is my personal response to your inquiry, based on my own reading of the AAUP position, which can be accessed here: http://www.aaup.org/news/affordable-care-act-and-part-time-faculty

After reading your note, what stands out for me is this statement:

"The current ratio being discussed is that each credit hour = 3 hours worked. So, someone teaching 9 credits in a semester would be thought to work 27 hours/week."

Before proceeding to measure this calculation against the AAUP Statement on the subject, I would first like to ask for clarification as to where this ratio is coming from in the first place?

I ask because it is hard for me to imagine that any faculty member, in any division, would agree with this formulation.

First, a a general rule, there is the fact that many professors on the tenure-track here at Penn Sate hold a per semester teaching load of six credits (2 classes) per semester.

To this are added any number of other instructional or educational activities, including course prep, grading, independent studies, advising, directed thesis research for undergrads, Masters, and PhD students, writing letters of recommendation, ad infinitum.

This does not even include required professional service and scholarship.

In my college, for at least the past decade, adjunct/fixed term and visiting instructors/professors generally end up with a 2/3 or 3/3 load.

One example from last semester was a visiting assistant professor teaching 3 classes, two of them with hundreds of students, involving two teams of multiple TAS, ending up with at least ten graduate teaching assistants working with this one professor.

Work on these kinds of classes necessarily requires weekly TA meetings (at last one hour a week per curse, times three in this case) in addition to the three hours plus hours of actual class time, making it four a piece for the three classes. When you add course prep and grading, this calculates, by my estimate, to at least 40 hours a week.

And this is how the time spent, to which we would, of course, add the amount of time devoted to to departmental, college, and university service, scholarship and research, professional activities, mentoring individual students, thesis advising , etc.

Indeed, every semester, by dictate of the PA State Legislature, faulty are required to fill out the FACULTY ACTIVITY REPORT, accounting for hours spent in these very activities. Mine always exceed the 40-hour mark, and I am sure I am not alone.

Given all of that, it seems to me that the estimate of 9 hours or so for each class per week falls a bit short of the mark.

Now, let's take a look at the AAUP Statement on the matter:

"The AAUP supports guidelines under development by the IRS that explicitly address part-time faculty members, a category of individuals who are often ignored and treated as if they were invisible despite comprising more than half of U.S. faculty positions. Proposed rules issued by the IRS in January don’t provide an exact formula, but they say that employers “must use a reasonable method for crediting hours of service.” They continue:

A method of crediting hours would not be reasonable if it took into account only some of an employee's hours of service with the effect of recharacterizing, as non-fulltime, an employee in a position that traditionally involves more than 30 hours of service per week. For example, it would not be a reasonable method ... [in crediting hours for] ... an instructor, such as an adjunct faculty member, to take into account only classroom or other instruction time and not other hours that are necessary to perform the employee's duties, such as class preparation time.

In addition to class preparation time, the AAUP recommends that institutions consider the following activities when calculating hours of service for part-time faculty members. The list is not comprehensive, but includes activities commonly engaged in by part-time faculty members:

Grading (taking into account class size)
Participating in orientation sessions
Participating in and preparing for departmental or other college meetings
Keeping current in the field (for example, by attending relevant conferences)
Meeting with students or responding to student inquiries
Mentoring students or advising extra-curricular activities or clubs
Participating in accreditation reviews

Colleges and universities should realize the importance of providing health insurance to employees; we call on them to comply with the law and devise fair methods of calculating adjunct faculty hours, methods that fully take into account the many activities in which such faculty members engage. We have been dismayed by news reports of a handful of colleges and universities that have threatened to cut the courseloads of part-time faculty members specifically in order to evade this provision of the law. Such actions are reprehensible, penalizing part-time faculty members both by depriving them access to affordable health care as intended by law and by reducing their income."

Please note some of the details here.

"Keeping current, for example, means not sitting on your laurels, but following the latest, ever-expanding research in your field. Doing this takes time.

Has this requirement (and it is both an expectation and a requirement for any member of the faculty, at any level) been taken into account?

Same goes for the other ones. Indeed, it seems that specific course load, while significant, to be sure, should not be the sole means of determining the work hours REQUIRED of faculty.

Another issue to pay attention to is the threat of cutting hours for fixed-term or so-called part-time faculty in order to evade the health benefit requirements of the new law.

The AAUP statement on this policy is unequivocal: "Such actions are reprehensible," and are in obvious conflict with the intent of the law.

To conclude, I have raised two major points in response to your question:

1. According to the AAUP statement: Class hours alone should not be the determining factor in calculating part-time status.

2. Also according to the AAUP, the cutting of faculty members' hours to avoid provided the benefits called for in the ACA should be considered "reprehensible."

. . . . .

________________

Here are the just released Treasury Department Regulations.  Professor Curran rightly notes that by these standards, a fixed-term instructor with a 12-credit hour teaching load would still not be credited with working 30 ours, which is the point where the ACA requires Health Benefits to be provided. 

Writing for Inside Higher Education, Clarity on Adjunct Hours, Feb. 11, 2014, Doug Lederman notes:

WASHINGTON -- The Obama administration on Monday released its long-awaited final guidance on how colleges should calculate the hours of adjunct instructors and student workers for purposes of the new federal mandate that employers provide health insurance to those who work more than 30 hours a week.

The upshot of the complicated regulation from the Treasury Department and the Internal Revenue Service:

On adjuncts, colleges will be considered on solid ground if they credit instructors for 1 ¼ hours of preparation time for each hour they spend in the classroom, and instructors should be credited for any time they spend in office hours or other required meeting time.

On student workers, the IRS opted to exclude work-study employment from any count of work hours, but the administration declined to provide an exemption for student workers over all. As a result, colleges and universities will be required to provide health insurance to teaching and research assistants who work more than 30 hours a week.

Adjunct Hours

The issues of how to count the hours of part-time instructors and student workers have consumed college officials and faculty groups for much of the last 18 months, ever since it became clear that the Affordable Care Act definition of a full-time employee as working 30 hours or more a week was leading some colleges to limit the hours of adjunct faculty members, so they fell short of the 30-hour mark.

All that the government said in its initial January 2013 guidance about the employer mandate under the health care law was that colleges needed to use "reasonable" methods to count adjuncts' hours.

In federal testimony and at conferences, college administrators and faculty advocates have debated the appropriate definition of "reasonable," with a focus on calculating the time that instructors spend on their jobs beyond their actual hours in the classroom. The American Council on Education, higher education's umbrella association and main lobbying group, proposed a ratio of one hour of outside time for each classroom hour, while many faculty advocates have pushed for a ratio of 2:1 or more.

In its new regulation, published as part of a complex 227-page final rule in today's Federal Register, the government said that it would be too complex to count actual hours, and it rejected proposals to treat instructors as full time only if they were assigned course loads equivalent or close to those of full-time instructors at their institutions.

Read more: http://www.insidehighered.com/news/2014/02/11/irs-guidance-health-care-law-clarifies-formula-counting-adjunct-hours#ixzz2t3UItk6X
Inside Higher Ed

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U.S. TREASURY  DEPARTMENT FACT SHEET

Final Regulations Implementing Employer Shared Responsibility Under the Affordable
Care Act (ACA) for 2015

Provisions to Assist Smaller Businesses and Businesses that Offer Most but Not All Employees Coverage in 2015
Approximately 96 percent of employers are small businesses and have fewer than 50 workers and are exempt from the employer responsibility provisions. To ensure a gradual phase-in and assist the employers to whom the policy does apply, the final rules provide, for 2015, that:

o The employer responsibility provision will generally apply to larger firms with 100 or more full-time employees starting in 2015 and employers with 50 or more full-time employees starting in 2016.
o To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond, helping employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours.

Various Employee Categories

The final regulations provide clarifications–many of which are based on comments on the proposed regulations –regarding whether employees of certain types or in certain occupations are considered full-time, including:

o Volunteers: Hours contributed by bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not cause them to be considered full-time employees.
o Educational employees: Teachers and other educational employees will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
o Seasonal employees: Those in positions for which the customary annual
employment is six months or less generally will not be considered full-time employees.
o Student work-study programs: Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.
o Adjunct faculty: Based on the comments we received, the final regulations provide as a general rule that, until further guidance is issued, employers of adjunct faculty are to use a method of crediting hours of service for those employees that is reasonable in the circumstances and consistent with the employer responsibility provisions. However, to accommodate the need for predictability and ease of administration and consistent with the request for a “bright line” approach suggested in a number of the comments, the final regulations expressly allow crediting an adjunct faculty member with 2 ¼
hours of service per week for each hour of teaching or classroom time as a reasonable method for this purpose.

Provisions to Assist Businesses to Comply in 2015
To provide a gradual phase-in of the employer responsibility provisions and assist employers in complying and providing coverage, the final rules provide transition relief
for 2015.

 While the employer responsibility provisions will generally apply starting in 2015, they will not apply until 2016 to employers with at least 50 but fewer than 100 full-time employees if the employer provides an appropriate certification described in the rules.
 Employers that are subject to the employer responsibility provisions in 2015 must offer coverage to at least 70 percent of full-time employees as one of the conditions for avoiding an assessable payment, rather than 95 percent which will begin in 2016.

Full-Time Employee Status Determinations

 Like the December 2012 proposed regulations, the final rules allow employers to use an optional look-back measurement method to make it easier to determine whether employees with varying hours and seasonal employees are full-time.
 Responding to comments, the final regulations also clarify the application of this method and the alternative monthly method of determining full-time status.

Affordability Safe Harbors

 Like the proposed regulations, the final rules provide safe harbors that make it easy for employers to determine whether the coverage they offer is affordable to employees.
 These safe harbors permit employers to use the wages they pay, their employees’ hourly rates, or the federal poverty level in determining whether employer coverage is affordable under the ACA.

Other Specific 2015 Provisions

 In addition to the two forms of 2015 transition relief noted earlier, a package of limited transition rules that applied to 2014 under the proposed regulations is extended to 2015 under the final regulations, including:

o Employers first subject to shared responsibility provision: Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of at least six consecutive months, instead of a full year. This will help facilitate compliance for employers that are subject to the employer shared responsibility provision for the first time.
o Non-calendar year plans: Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1, 2015, and the conditions for this relief are expanded to include more plan sponsors.
o Dependent coverage: The policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016.
o On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months even with respect to a stability period–the time during which an employee with variable hours must be offered coverage –of up to 12 months.
o As these limited transition rules take effect, we will consider whether it is necessary to further extend any of them beyond 2015.

Next Steps: Final Rules Simplifying Employer Information Reporting

Many comments on the proposed employer information reporting regulations have urged that final rules provide streamlined ways to comply with employer information reporting --especially for employers that offer highly affordable coverage to all or virtually all of their full-time employees.
Others have asked for a single form for employer and insurer reporting provisions when possible. Treasury and the IRS will issue final regulations shortly that aim to substantially simplify and streamline the employer reporting requirements.

For the final employer shared responsibility regulations, click here.

For more information on determining whether an employer is subject to the employer shared responsibility regulations, click here.

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