The Affordable Care Act (ACA) is part of the law passed by Congress and signed by President Obama on March 23, 2010. It represents the most significant overhaul of US Healthcare since the passage of Medicare and Medicaid in 1965, and as such, is receiving a lot of attention in the news and by local school districts and other organizations. It has significant negative budget implications for the School District of Janesville, and as a result, will have economic impact on many individual employees.
Here is how it will impact the School District of Janesville. All large employers, including the School District of Janesville, will be required to offer minimum affordable health insurance coverage to all “full-time” employees, or face monetary penalties. Under the ACA, a “full-time” employee is “an employee who is employed an average of at least 30 hours of services per week with an employer.” The coverage must be offered to all “full-time” employees and their dependents (but not spouses of employees).
Under the School District of Janesville’s collective bargaining agreements, the School District of Janesville offered health insurance coverage to full-time employees who were defined by the agreements as employees who work seven hours per day. The new ACA definition of full-time employee introduces the potential requirement to offer health insurance coverage to around 280 traditionally part-time employees who did not receive health insurance coverage from the School District of Janesville under the labor contracts. The cost of potentially having to offer health insurance to these employees is estimated around $3,000,000. The effective date of this new coverage would be September 1, 2014. Because of this new and additional high cost resulting from the ACA’s more expansive definition of full-time employee, the School District of Janesville is looking at options.
The first option is to reduce the hours of the staff in a way that provides the required levels of service to students but insures that certain employees are not scheduled for an amount of hours of service that would qualify them for “full-time” status under the ACA. There are specific rules that come into play that apply only to employees of an educational organization, affecting how hours of service are counted or credited during summer break. We are still examining the viability of this method, but believe it provides enough flexibility to accomplish the objective of minimizing any additional costs in health insurance benefits.
Another option is to leave the hours of work unchanged, decline to pay for the coverage, and elect to pay certain penalties under the “pay or play” provisions of the ACA. We believe the penalty cost to be prohibitive, along with the fact that the School District of Janesville would not choose to break the law.
A third option would be outsourcing some of the School District of Janesville positions: a solution that other school districts are examining.
The fourth option, to enable the District to better meet our needs, would have the School District of Janesville keeping a limited number of positions as newly-qualified "full time" positions. These positions would be offered insurance coverage.
We will need to make changes by September 1, 2013. This will be discussed at the July 9, 2013 Board meeting.
There is a memo posted on the School District of Janesville’s website under the June 25, 2013 Board packet that covers this information in greater detail.