Senator Susan Collins (R-ME) recently introduced the “Forty Hours is Full Time Act of 2013” (S. 701). It would modify the definition of full-time employee (FTE) for purposes of the shared responsibility mandates in the Patient Protection and Affordable Care Act (PPACA). Starting in 2014, the PPACA imposes a $2,000 employer penalty for each full-time employee – after the first 30 – where the business employs 50 or more full time equivalent employees, does not offer health insurance to all employees, and at least one of the employees qualifies for a federal subsidy to purchase health insurance. The definition of “full-time employee” in the calculation of target employer’s penalty is based upon the total of the number of employees working at least 30 hours a week.
S. 701 would change the definition of full-time employee to those working at least 40 hours a week rather than 30. This would affect both the determination of whether the employer is a “large employer” subject to the mandate and the number of employees for whom the employer would have to provide health insurance or pay a penalty. These changes would be beneficial to home care agencies that are unable to provide health insurance and are thus subject to the penalties. The legislation would also result in a definition of “full-time” that is more in line with current employment practices related to qualifying for health insurance. If passed, S. 701 would provide more leeway for home care employers who may be considering restricted working hours of employees in order to avoid or reduce the penalty that they currently face.
In its Legislative Blueprint for Action, the National Association for Home Care & Hospice asserts that home care businesses with more than 50 FTEs have three problems that are fairly unique for employers impacted by PPACA. First, home care is most often paid for by government programs such as Medicaid and Medicare. These programs do not normally raise payment rates adequately – or at all – to cover increased costs.
Second, the consumer of private pay home care is most often an elderly or disabled individual on a fixed or low income who cannot afford to absorb any additional price increases that would be needed to cover the cost of employee health insurance or the alternative penalty.
Third, the home care workforce is often employed with widely varying weekly work hours because of the constantly changing home care clientele and the always changing needs of those who require home care services. The model defining FTE in the current law does not accommodate these variations.
The Paraprofessional Healthcare Institute (January 2006) found that 40 percent of home care workers lack health insurance coverage, compared to the Bureau of Labor Statistics estimate of 16 percent for all workers. The estimate for home care workers does not include privately paid workers and those who work part time, so the overall percentage of home care workers without health insurance is likely well over 50 percent. A 2013 survey by the National Association for Home Care & Hospice indicates that 35 percent of Medicare home health agencies do not offer health insurance to their employees while 65 percent of Medicaid home care companies and private pay home care companies do not offer health insurance.
The absence of health insurance for home care workers will lead to significant monetary assessments against home care companies. Current reimbursement levels in Medicare and Medicaid – along with the barriers to price increases in private pay home care – put continued access to care in severe jeopardy. The only business option available to home care companies in these circumstances is to limit the working hours of caregiving staff to less than 30 hours per week (40 if S. 701 were enacted). This will likely lead to increased turnover, lower overall wages, and the weakening of the quality of care – all while still being unable to provide health insurance for the home health workforce.
Home care industry leaders have called on Congress to exempt home care providers from the PPACA employer responsibilities, provide a subsidy to all home care providers to supply health insurance, and/or provide a subsidy or tax credits to home care clients to cover the increased cost of care triggered by the employer responsibility provisions. Congress should help the states ensure that low-wage home care workers have health insurance through Medicaid or otherwise.
Congress should amend PPACA to require that all government health programs adjust provider rates to meet the additional costs that will be incurred by health care providers to make health insurance available to all their employees. In addition to expanding the definition of full time to 40 hours a week as called for by S. 701, Congress should also amend PPACA to allow for a definition of a full-time employee that evaluates the individual’s working hours over a 180-day period rather than the current monthly calculation.
Tags: Bureau of Labor Statistics, Forty Hours is Full Time Act of 2013 (S. 701), National Association for Home Care & Hospice, Paraprofessional Healthcare Institute, Patient Protection and Affordable Care Act, Susan Collins