The Affordable Care Act has ushered in many changes that HR professionals need to be aware of, from the imposition of a Cadillac tax on certain policies to new requirements for employee insurance coverage. One of the biggest changes, however, may be that the ACA has changed what full-time employment means.

  • “Full time” was generally considered 40 hours pre-ACA. Before the Affordable Care Act was passed, the vast majority of workforces defined a full-time employee as someone who worked 40 hours per week or more. This was the level at which most employers began providing benefits like health insurance, paid leave, and vacation time.
  • The ACA defined “full time” as performing 30 hours of service each week. A definition of “full time” under the Affordable Care Act has big implications for employers, because a company can incur an obligation to provide insurance coverage for all workers considered “full time.” Starting in 2016, an employer with 50 or more full-time employees (or full-time equivalents) is going to be subject to a $2,000 penalty per full-time worker who is not provided with qualifying insurance coverage. The insurance coverage mandate under the ACA requires comprehensive insurance that provides 10 essential benefits, including coverage for most types of preventative care. Employers who choose to buy coverage could face huge expenses for insurance premiums for employees not previously considered “full time,” while those who don’t buy coverage could face penalties reaching into the millions.
  • Efforts are being made to redefine “full time.The Save American Workers Act of 2015 was passed in January by the U.S. House of Representatives to amend the definition of “full time” under the ACA to 40 hours per week (the previous standard). SAWA would redefine the ACA’s definition of both “full time” and “full-time equivalent.”   A similar act, the Forty Hours is Full Time Act of 2015, was also introduced in the Senate in January of 2015. Similar legislation has stalled in the senate in the past and President Obama has indicated an intention to veto any law changing the definition of full-time under the ACA.

The legal battle in Washington about what it means to be a full-time employee is likely to rage on for the next several years, but in the meantime HR professionals have to grapple with the current reality of a new definition of what it means to be a “full-time” worker.

Companies need to make a choice on whether it makes sense for them to change employee schedules, thus altering the face of full time work forever, or whether there are other options like providing broader insurance or dropping coverage for all workers and paying the penalty.

As your business faces challenges associated with ACA-compliance, you need a strong HR partner you can trust.  Let HR Alliance help you respond to your new obligations under the Affordable Care Act.