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Universities in the hot seat over health care

Across the country, university administrators are feeling the heat about a health care reform requirement that goes into effect Jan. 1, 2014. On that day, or the next plan year after the deadline, any employee who works 30 hours or more is required to be eligible to receive health insurance under an employer-sponsored plan.

The rule is no different for universities than it is for any other employer. However, it is bringing an issue to light that has festered on campuses for years: How to accurately count the hours of adjunct faculty.

In New Jersey, for example, a credit hour is defined as 55 minutes of instruction, three times a week. It doesn’t include office hours to meet with students. It doesn’t include prep time, lab time or time grading papers. Adjuncts have protested this counting formula for years. Now, with health care coverage at stake, they are raising their voices over this issue even more.

Administrators would say they are just as frustrated as the adjunct staff. Many are making good-faith efforts to clarify their policies, but are getting limited support from the Department of Labor, Health and Human Services or the Internal Revenue Service, none of which have issued final regulations about how to calculate adjunct faculty time. Instead, in preamble to proposed (not final) regulations, colleges and universities are advised to “use a reasonable method of crediting hours of services for Adjuncts that is consistent with the employer mandate purposes of the Act.” Clear as mud, huh?

But what is considered “reasonable” to university officials (say, crediting three hours of service for every hour taught) is quite different from how professional organizations representing adjunct faculty define reasonable (they’d like the hours of credit to be greater). Depending on how you count, it could result in hundreds of thousands of dollars in additional costs to university health plans if several more adjuncts become eligible for coverage.

In preparation for interim solutions and final regulations being issued, many higher education institutions are starting to take action by reducing the number of classes adjunct faculty can teach. In Chicago, Pittsburgh and Palm Beach, universities, colleges and community colleges have already warned adjunct faculty they will be reducing their hours to ensure they do not meet the 30-hour threshold.

“All of us want to ensure we have enough adjuncts to staff classes, but we are faced with new rules,” Palm Beach administrators wrote in a letter to adjuncts in January.

Universities are not the only employers expected to be hit hard by the 30-hour rule, or who are expected to reduce employee hours as a result. Retailers, restaurants and other industries that rely on part-time employees are expected to draw a hard line about numbers of hours part-timers can work, and to do a better job enforcing such policies.

Some studies suggest health care costs may not shift as much as employers would think. There may be a chance previously ineligible employees won’t enroll in insurance once they become eligible. For example, data from ADP Research Institute recently showed that in 2012, when eligible part-time employees were offered benefits, only 53 percent elected coverage, compared to 77 percent of full-time employees.

What the study did not account for, however, is that often premiums for part-time employees are considerably higher than for full-time employees. On a part-time salary, higher premiums can make the coverage appear unaffordable. If employees are reclassified as full-time, and therefore eligible for full-time benefit premiums, more may decide to participate, and employer costs will go up.

Bottom line: Any employer who doesn’t offer benefits to employees who work more than 30 hours a week will have some tough choices to make in the coming year. Those who don’t even know how to accurately count hours need to sharpen their pencils even more in order to clarify undefined employment rules and calculate health care costs at the same time.

Michelle Hicks, a senior professional in human resources, is a director in the communication practice of Buck Consultants, a Xerox company. 

About Michelle Hicks