Ninety part-time employees with the Fayette County School Corp. saw their work hours cut this week due to a provision of the federal Affordable Care Act.
Citing a provision of the Patient Protection and Affordable Care Act – also known as Obamacare – the Fayette County School Corp. announced during Tuesday’s board meeting the hours of 90 part-time employees have been reduced from upward of 35 hours to 28.25 hours per week.
The new law, which takes effect Jan. 1, 2014, fines employers of more than 50 people if they do not offer health insurance to employees who work more than 30 hours per week. The fine can be $2,000 per employee.
The move was made this week because as part of the ACA, the federal government will verify the number of full-time employees within the corporation for the employer’s last six months, said Russell Hodges, superintendent.
“We, in the past at Fayette County, have looked at 35 hours as being that breaking point when we provided health insurance (to employees),” Hodges said. “Obamacare says 30.”
Hodges said 450 employees worked more than 30 to 35 per week. The corporation does not not offer health insurance to them.
Hodges said if the corporation did not change that situation, it would be subject to almost $1 million in fines.
The act also requires that a certain percentage of full-time employees have health coverage or else be subject to fines. Fayette County schools did not meet that requirement, Hodges said.
“The expectation is that large employers will have 95 percent of their people under affordable health care. If you fail to do that, then there’s a pretty significant penalty for that,” Hodges said. “Fayette County would be responsible for an annual penalty of $900,000, if there were no adjustments. That’s not a one-time bill, that’s ongoing. That’s not sustainable ... we would be looking at significant layoffs to try to cover that cost.”
Hodges said the corporation researched how much it would cost the corporation to provide those 90 employees health coverage.
The estimated cost is less than half of the fines the corporation would incur for not offering health insurance to those 90 employees, but is still a large sum, Hodges said.
“We calculated that out to be about $400,000, again on an annual basis,” Hodges said.
Though hours have been cut for those 90 employees, they will have a chance to make up those hours performing other duties after the school year ends, according to Hodges. Those options will be decided by building principals.
“We tried to make sure that everyone who was currently working, even though they had hours reduced, will have an opportunity to earn full salary for this year, and this year only,” Hodges said. “Again, going forward, we’ll have to decide what we do.”
It is uncertain how the ACA will affect the school corporation and its employees in the future, Hodges said. The school corporation is looking at options such as offering different health care insurance plans, Hodges said.
“It’s a really complicated deal for us,” Hodges said. “As we get closer to the implementation date on this, we’ll have a better understanding of how some of that will impact things.”
Board member Ron Spurlock said that while the ACA may be the law spurring cuts to employee hours, there could be options for the corporation to reduce the effects.
“I think we can make a positive out of it,” Spurlock said. “Even if we have to cut the hours, we can make up for that by either giving them a raise to make up the difference or giving them the option to make up those hours, if they wanted to ... there’s a bunch of different options that maybe can overcome (the cuts). We’re just going to have to decide, collectively as a board, what’s going to be the best for the corporation.”
Examining how other school corporations are handling the situation with ACA is another possibility, he added.
“I’m kind of curious as to what the other (school) corporations are doing,” Spurlock said. “Obviously, Fayette County isn’t the only one affected by this. The number one thing, in my mind, is how do we get around this without affecting the students.
Board member Lori Savoy said the board and the corporation will do what it can to help employees whose hours were cut.
“There’s so many unknowns with it right now, you can’t make a solid decision,” Savoy said. “We will do what we can to make it fair for (those employees).”
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