Are Your Coaches and Adjuncts Full time According to the Affordable Care Act?

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1 ASSOCIATION OF CHIEF HUMAN RESOURCE OFFICERS 2014 FALL INSTITUTE (ACHRO) Are Your Coaches and Adjuncts Full time According to the Affordable Care Act? 10/22/2014 PRESENTED BY: Heather DeBlanc & Cindy Vyskocil

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3 Are Your Coaches & Adjuncts Full-Time According to the Affordable Care Act? Association of Chief Human Resource Officers Fall 2014 Institute (ACHRO) October 22, 2014 Presented By: Heather DeBlanc and Cindy Vyskocil Disclaimer Information contained in this presentation is general information and information based upon LBCC s assessment of its current collective bargaining language, administrative regulations, and current hiring practices. Implications for your District may differ based upon your administrative regulations, collective bargaining agreements, and hiring practices. The ACA is new and continues to change as regulations and guidance are released. You should consult with your legal counsel before adopting any of the following business practices. 22 Overview Large Employer Mandate Overview Calculating Hours of Service Adjuncts, Coaches, Short Term Temps Monthly Measurement Method Look Back Measurement Method 33 1

4 Large Employer Mandate: Overview Effective January 1, 2015 (was 2014) Large Employers Trigger: FT employee purchases subsidized coverage in exchange (Penalty A) Employer does not offer minimum essential coverage to substantially all FT employees & dependents; or (Penalty B) Coverage is unaffordable or doesn t provide minimum value SOME TRANSITION RELIEF AVAILABLE 44 To Avoid Penalty A Must Offer Coverage to Substantially All Full-Time Employees & their Dependents For employees who opt out, make yearly offer of coverage. 55 Employer Mandate: Avoiding Penalties Substantially All = 95% of full-time employees Margin of error Dependents Children up to age 26 (but not stepchild or foster child) Not spouses In 2015 only transition relief means that substantially all is only 70% 66 2

5 How Much is Penalty A (Failure to Offer Coverage)? Penalty A = $166.67/month x (# of Full-time employees employed during that month less 30 (less 80 in 2015 only)) $166.67/mo. ($2,000/yr) = Applicable Payment Amount per month in 2014 Amount adjusts annually 77 How to Avoid Penalty B? To Avoid Penalty B Offer Affordable Coverage that Provides Minimum Value to full-time employees Employee may receive subsidy in exchange when: Employee s share of the premium for the employer s lowest cost, self-only plan is more than 9.56% of household income. 88 Affordability Safe Harbors Employee premium contribution toward lowest cost self-only plan is no more than 9.5% of: 1. Form W-2 (use Box 1 wages) 2. Rate of Pay (hourly rate x 130 or monthly salary) 3. Federal Poverty Line (monthly FPL) 99 3

6 How much is Penalty B (Unaffordable Coverage)? Monthly penalty is lesser of: Penalty A OR Penalty B = $250 x # of FT employees receiving subsidy during that month Key Who is Full-Time? Offer of coverage Affordability determination Calculation of Penalties Reporting & Employee Statements Forms 1095C (one for each full-time & covered employee) Form 1094C (transmittal) (Penalties = $100 per return/statement) Calculating Hours of Service 4

7 What is an Hour of Service? Each hour employee is paid or entitled to payment for performance of duties; & Each hour employee is paid or entitled to pay during time for which no duties are performed (i.e. vacation, holiday, illness, incapacity, military duty, leave, jury duty, layoff) Basic Rule Calculating Hours of Service Hourly hours of service Non-hourly 3 methods: 1. Hours of service 2. Days worked equivalency (8hr/day for each day entitled to pay/req d to be credited with an hour of service) 3. Weeks worked equivalency (40hr/wk for each week entitled to pay/req d to be credited with an hour of service) Volunteers Do not include hours worked by bona fide volunteers Bona fide volunteer = Government entity, 501(c) or 501(a) organization Only compensation allowed is reimbursement for reasonable expenses or reasonable benefits/fees customarily paid

8 Student Employees No exception for graduate assistants, research assistants, TA s, resident advisors, etc. Hours paid or entitled to payment will count unless subsidized through Federal work study program (or a state or local government s equivalent). Student Worker Exemption Act of 2014 & Student Job Protection Act of 2014 (H.R. 5262; HR 5298; pending legislation to exempt students from definition of employee) Student Employees Do not include: hours for Federal work-study program (or state or local government equivalent program) unpaid extern/intern hours paid extern/intern hours for an outside employer (these hours do not count for the District) Include: all other hours of service for which student is paid or entitled to payment Adjunct Faculty Members Final regulations call for a reasonable method to credit hours of service Not reasonable to give credit for class time only, even if adjuncts are compensated per course or per credit hour Must credit non-classroom activities such as class preparation, grading papers and exams and counseling students

9 Reasonable Method of Crediting Adjunct Hours IRS example: 2.25 hours of service per week for each hour of teaching or classroom time to account for prep & grading; PLUS 1.00 hour of service per week for each additional hour (such as required office hours or required attendance at faculty meetings) IRS Example: For each 1 hour lecture, add 1.25 hours for preparation/grading = 2.25 hours of service Formula: H=2.25U U is units taught H is Hours of Service (30 Hours of Service = Units) Add required ancillary duties, office hours Add stipend work Reasonable Method of Crediting Adjunct Hours Educational institutions may also use other reasonable methods for determining the number of hours of service for adjunct faculty Commenters noted a wide variation of work patterns, duties, and circumstances apply in different institutions, academic disciplines, and departments, and apply to different courses and individuals, and that this might factor into the reasonableness of a particular method of crediting hours of service. 79 Fed.Reg. 8544,

10 Other Option for Reasonable Method Review collective bargaining agreements and other personnel rules for any guidance on classroom prep and ancillary duties Classes with lower LHE/Units might use lesser than 2.25 factor? Goal is to capture Hours of Service Most Conservative Use IRS Example LBCC Calculating Hours Instructional hours must be calculated to include prep time and grading therefore ACA requires each instructional hour be multiplied by 2.25 Example: IA Basketball Class is listed in catalog as having 11.3 teaching hours per week 11.3 x 2.25 = (ACA hours per week) Non-instructional hours are calculated hour for hour (competition, travel to and from, recruiting etc.) 2 hours recruiting = 2 hours Calculation of hours must include ALL hours worked for each employee (instructional + non-instructional) Coaches Paid via stipend Assign not to exceed hours to stipend work Reasonable determination of hours Cannot likely be treated as volunteer during the off-season if performing duties relating to coaching

11 LBCC Part-Time Head Coaches Permitted to work one Inter-collegiate Athletics Class per semester (11 weekly lecture hours x 2.25 = 24.75) Developed and signed (annual) employment contract for stipend amount to define duties and compensate each coach for ancillary coaching duties over a 12-month period (350 hours) (If creating stipends or making a change to an existing stipend, it must be negotiated because it falls under the purview of collective bargaining) NOTE: If paid for ancillary duties seek legal opinion as to whether or not payment for ancillary duties could include prep for practice (Intercollegiate Athletics Class) Options: Determining Full-Time Employees Monthly Measurement Method Average 30 hours of service per week in any given month (130 hours per month if counting each calendar day) If using weekly periods (use weekly rule) 4 weekly periods/month, 120 hours = full-time 5 weekly periods/month, 150 hours = full-time Look Back Measurement Method Safe Harbor Average 30 hours of service per week over a Standard Measurement Period (up to 12 mo) Apply same method to all ee in reasonable category: Represented v. Unrepresented Each Bargaining Unit Salaried v. Hourly Monthly Measurement Method 9

12 Monthly Measurement Method Do not use averaging method for Special Unpaid Leave Employment Break Periods Re-hire rules apply Full-time ee treated as continuing must be offered coverage by 1 st day of calendar month after resuming service to avoid penalties. No exceptions for seasonal/variable hour Weekly Rule 4 weeks (120 hours = full time) Sun Mon Tues Wed Thurs Fri Sat Weekly Rule 5 weeks (150 hours = full time) Sun Mon Tues Wed Thurs Fri Sat

13 Look Back Measurement Method 2 Purposes to Safe Harbor 1. Identify who is full-time for purposes of IRS reporting. 2. Identify who is full-time for purposes of determining who qualifies for coverage. Know the purpose for which you are using the Safe Harbor. Labor relations implications Legal Restrictions Timing & Length of Periods Ongoing employees Standard Measurement Period Administrative Period Stability Period New Variable Hour, Part-Time, Seasonal employees Initial Measurement Period Administrative Period Stability Period Comply with legal requirements when setting up the periods

14 Look Back Measurement Method Safe Harbor New Employee Full-time Part-time Variable Hour Seasonal Ongoing Employee employed for one entire standard measurement period July Plan Year - Ongoing October Plan Year - Ongoing

15 Calendar Year Initial MP New Employees New Start Date, Ask: Does employer reasonably expect employee to average 30 or more hours of service per week over the initial measurement period? What does reasonably expect mean? Reasonably Expected to be Full-Time? Fact-Sensitive Analysis (at start date): Is employee replacing one who was full-time? Extent to which employees in same or comparable positions are full-time? Job Advertised? Job Description? How communicated to employee?

16 If Reasonably Expected to be Full-Time, then If not offered coverage within first 3 months, employer will be subject to potential penalty during those first 3 months with regard to that employee Employee May Trigger Penalty Employee Will Be Included in any Full-Time count under ACA during those months Not Reasonably Expected to be Full-Time Seasonal = an employee who is hired into a position for which the customary annual employment is 6 months or less. Part-Time = anticipated to average less than 30 hrs of service/wk Variable Hour = at start date cannot determine whether employee will average 30 hrs of service/wk b/c hours are variable or uncertain. Cannot take into account likelihood of termination before end of initial measurement period New Variable Hour, Seasonal or Part-Time Employees Start measuring hours of service under Initial Measurement Period (IMP) Will not be treated as full-time during IMP Will not trigger a penalty during IMP Even if they hit 130 hours of service/month during any month of IMP If hit 1560 hours of service during year, then they will be full-time for following Stability Period

17 Rehires as New Employees? A rehire may be treated as a new EE if 26 consecutive wks. of no qualifying hours, OR Parity Rule: The break in service is at least 4 wks. long and the break is longer than the preceding period of service. Not a new EE If cannot qualify as new hire under above calculation, then the individual s previously used SMP and SP continue to apply, as if there were no break in service Special Unpaid Leave Only 3 types of Special Unpaid Leave: Family and Medical Leave Act (FMLA) USERRA (military leave) Jury duty Treated as a continuing employee upon return Employee cannot be penalized for protected leave period Special Unpaid Leave Averaging Method: 1. Exclude special unpaid leave/break period and apply average over entire measurement period; or 2. Impute hours of service for the special unpaid leave/break period at a rate equal to average weekly hours of service for weeks

18 Employment Break Periods Break of less than 26 consecutive weeks Cannot take into account the likelihood of an employment break period in determining the reasonable expectation of hours of service for a new employee School employees cannot lose full-time status simply because they do not have hours of service during academic breaks Employment Break Periods An employment break period is a period of at least four consecutive weeks with no hours of service Special unpaid leave (FMLA, USERRA, jury duty) does not count as a break in service Calculating Hours of Service Over the Employment Break Period Do rehire rule analysis first. If not a rehire, then look to these rules. Determine the employee s average hours of service during non-break period and not part of any period of Special Unpaid Leave ( Average Weekly Hours of Service )

19 Calculating Hours of Service Over the Employment Break Period Identify the number of weeks during the Employment Break Period (EBP): (W) Multiply (W) by the Average Weekly Hours of Service = (Total EBP Hours) Add the Total EBP Hours (or if the Total EBP Hours are more than 501, then add 501) to the number of Hours of Service the employee accrued for that portion of the measurement period that is not part of the Employment Break Period (and not part of any period of Special Unpaid Leave) = (Total Hours of Service) LBCC - Implications to Athletics Analysis and Accounting of PT Head Coaches Ancillary Duties in Terms of Hours Worked (weekend practice, tourneys, recruiting, watching film, travel to games, etc.) Analysis and Accounting of PT Head Coaches Teaching Schedules (1 teaching hour = 2.25 hours) Analysis and Accounting of Assistant Coaching Hours and Teaching Assignments Conversion of Stipends to Hours and Hourly Rate Calculating and Monitoring of ALL Combined Hours for Every Coach and Assistant Coach How to Prepare? Analyze Affordability Set up Measurement Method Set Up Tracking System for Hours Identify Reasonable Calculation for Adjuncts Assign Hours to Stipend Assignments Train Personnel Create Documentation of the Above!

20 Questions? Heather DeBlanc Attorney Los Angeles Office Cindy Vyskocil Associate Vice President, Human Resources Long Beach City College