Small business owners have known since ObamaCare’s passage that the law’s employer mandate requires any business with 50 or more full-time employees to provide at least the minimum level of government-defined health insurance coverage to those employees.
However, a little-known section of ObamaCare defines “full-time” work as averaging only 30 hours per week, rather than 40 hours. Employers who had planned to use more part-time workers to avoid higher costs associated with the mandate will need to rethink this strategy if the law is not repealed.
The pertinent section (1513) of the law reads as follows:
(4) Full-time employee
(A) In general
The term “full-time employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.
(B) Hours of service
The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
This section of the law indicates that a business must provide health insurance if it employs 50 or more employees who work an average of 30 hours per week, a work load that has previously been considered “part-time” in many businesses. An employer must pay a penalty per employee for each month it does not offer health insurance coverage if 50 or more “full-time” employees are on the payroll.
This somewhat obscure stipulation came to light in September as the IRS issued new regulations for employers to determine whether employees are part-time or full-time. According to the new rules, employers are given a “look-back” period of between three and twelve months to calculate employees’ average work hours per week to determine if they are “full-time,” i.e., average 30 hours weekly. Those employees who work the average 30 hours per week will count as “full-time” for the next six months, regardless of how much they work, thus precluding an employer decision to cut workers’ hours to avoid the mandate.
IRS Notice 2012-58 of Determining Full-Time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage (§ 4980H), states:
This guidance is intended to encourage employers to continue providing and potentially to expand group health plan coverage for their employees by permitting employers to adopt reasonable procedures to determine which employees are full-time employees without becoming liable for a payment under § 4980H, to protect employees from unnecessary cost, confusion, and disruption of coverage, and to minimize administrative burdens on the Affordable Insurance Exchanges (Exchanges).
This paragraph of the IRS notice alone illustrates the anti-business tone of the Obama administration. Yes, all Americans should be able to have health insurance if they wish to, but coercing business owners to provide it with language that clearly implies that businesses typically attempt to victimize their employees underscores the insidious “class warfare” methods of this administration.
Let’s hope that a Romney/Ryan administration, and a new Republican-led Senate, will allow all who wish to purchase health insurance to do so in a free market environment.