Affordable Care Act - University of Montana

Terri Phillips, AVP of HRS
The Affordable Care Act (ACA)
Provisions that affect UM:
Employers with more than 50 employees are subject to the ACA regulations, one
of which is tracking employee hours and making sure that all employees working
an average of 30 hours or more per week are offered coverage;
Insurance may not include exclusions in regard to pre-existing conditions; must
provide cost free preventative care; can have no lifetime maximums;
Our plan must pay a fee covered for the Patient Centered Outcomes Trust which
will be about $2 per each person covered under our plan;
It has been determined that the Montana University System is THE single
employer for purposes of the ACA and our health insurance plan – this means
that we will need to track employees across all of the system in regard to
employment and hours worked in order to maintain compliance;
The employer must provide all new hires with a cover letter and Part A of the
ACA documentation within 14 days of hire;
We must report the value of health insurance – according to the parameters of
the ACA – on employee W2s.
With the advent of ACA there are now TWO laws which govern
health insurance coverage for the University of Montana:
Montana Code Annotated –
Employees who are employed at a minimum .5 FTE for 6 months or greater
are eligible for health insurance. This is the rule that has governed our
health insurance and will continue to be in effect.
Affordable Care Act –
Eligibility is determined by the average hours worked rule – any employee
who works an average of 30 hours or more per week is eligible for health
insurance and must be offered employer health insurance. This regulation
will impact the hiring of students and temporary employees significantly.
Employers that are subject to the employer shared responsibility provisions (or
you may have heard the term “pay-or-play provisions”) and fail to offer their
full-time employees minimum essential coverage that is (1) affordable and (2)
provides minimum value may be subject to penalties if a full-time employee
purchases coverage on an Exchange and qualifies for a premium subsidy.
Therefore, it is important for those employers that will offer coverage to be able
to identify their full-time employees. A full-time employee for this purpose is an
employee who is employed on average at least 30 hours per week. A monthly
equivalent of 130 hours may be used.
UM has employees with variable-hour schedules, and the ACA provides the option
to use a system of measurement and stability periods to determine which
employees qualify as full time. The employee’s status as full time or part time,
based on the “measurement period”, governs the employee’s status for the
subsequent “stability period”, even if the employee’s hours change during the
stability period.
If you are hiring a student or temporary employee who has not, under our
current practice, been eligible for UM employer health insurance coverage
you need to be aware of several points:
Determining whether an employee is eligible for employer health insurance
coverage under the ACA hinges on whether that employee works an average
of 30 hours per work or more.
Hours of service include hours worked, and hours for which an employee is
paid but does not work, such as vacation, holiday, illness or disability, jury
duty, military duty, or paid leave of absence.
This “average” determination is made based on the hours that are worked
by the employee during what is called the “measurement period”.
The measurement period for the Montana University System (MUS) will be a
six month period and our first measurement period will begin January 1,
An employee’s hours will be analyzed at the end of the 6 month
measurement period to determine whether they have met the average 30
hour per week requirement.
If the employee meets the average 30 hour per week requirement then the
employee must be offered employer health insurance. The employee may
waive the health insurance, however, the employing department will still be
charged for the employer share (currently $806/month).
Determination of Eligibility:
Human Resource Services will monitor the records of employees
to determine whether the average of 30 hours per week has
Total hours worked by employees, for instance student
employees or temporary employees, for the measurement period
(January 1, 2014 to June 30, 2014) will be calculated and divided
by 6 months.
If the employee has worked 130 hours per month or more than
they will be eligible for inclusion in the health insurance plan.
If it is determined that the employee is eligible for insurance
then the employee will remain eligible for the full “stability
Stability Period:
The stability period is the period of time for which the employee is
eligible for health insurance.
The stability period must be as long at the measurement period at a
minimum – therefore the stability period for UM will be 6 months, same
as the measurement period.
If the employee proves to have worked at least an average of 30 hours
per week in the measurement period then in the following 6 month
period the employee is eligible for health insurance as long as they
remain employed.
This health insurance eligibility during the stability period remains true
whether the employee actually works an average of 30 hours per week
during the stability period or not.
Terri is hired Jan 1, 2014 as a temporary employee for 5 months. This
hiring status makes her ineligible for health insurance coverage under our
current rules.
During that 5 month period she works 40 hours per week with some over
time also – she is calculated as eligible for health insurance during the
measurement period.
Her department determines that they need to keep her for another 4
months, but only at 10 hours per week, and submit paperwork for this
Terri must be offered health insurance for the four month period of time
regardless of the number of hours she will work each week during that
time due to the provisions of ACA.
Break in Service Rules:
Under our current set of requirements a temporary employee can only be
hired for one year at a time at the most and must then have at least a 5
day break in service before being employed in another temporary
position. This break in service, under out current system, would bring
that employee back as a new hire for all matters including health
insurance eligibility.
Under the ACA there are three distinct rules that apply to break in service
for the purposes of health insurance eligibility:
1. Four (4) week break in service – if an employee has a four week break
in service then this is treated as continuous employment for purposes of
health insurance eligibility only.
Example: a temporary employee is hired to work fall semester and then has
4 weeks off over winter break returning to campus to work for the spring –
this is considered continuous employment.
Break in Service Rules:
2. A 26 week break in service – this is the golden rule. If an employee works
for UM, leaves employment, and returns to work for UM 26 weeks or more
later than that is a clear cut case of new employment and all considerations
about health insurance under the rule of ACA start over again.
3. A 4 to 26 week break in service – in this timeframe whether there is a
break in service according to the ACA depends on the number of weeks
worked versus the number of weeks out of work.
Example: An employee is hired January 1, 2014 to work spring semester and
continues this position through June 30, 2014. This is 26 weeks of work. The
individual does not work July and August and returns to UM on Sept. 1st. This
is 8 weeks not employed and this would be treated as continuous
Student employees and temporary employees are both subject to the
regulations of the ACA.
If they meet the 30 hour average per week criterion during a measurement
period then they must be offered employer health insurance for their stability
period. (An employee must be actively employed during their stability period to
be eligible for and receive the benefits of the employer health insurance).
If the employee waives the employer health insurance, the campus department
will still be responsible for the employer health insurance contribution on that
employee – currently $806 per month. (This does not give the student employee
health insurance coverage, but under our plan the employer contribution must
be paid even if the employee waives coverage).
If a student employee in a student position becomes subject to the
requirements of the ACA that employee will be moved to a temporary position.
This is required by federal law that limits student employees to work that is not
benefits eligible. This will cause that student to become subject to FICA,
Medicare and Unemployment taxes and all other requirements of a temporary
classified position – such as union affiliation, requirement for a written role
description, and a maximum of one year of employment in the temporary
Adjuncts and the ACA Impact:
Adjuncts are employed by UM to teach a certain number of classes each
semester. They are assigned an FTE based on their credit load. A full time
credit load at UM is 15 credits. A .5 FTE is 7.5 credits. The Montana
University System has determined that we will consider an 11.25 credit load
as equivalent to 30 hours of work per week. In order to track and apply the
regulations of the ACA accurately Human Resource Services will analyze the
credit load of adjuncts each measurement period in order to determine their
eligibility for health insurance coverage.
If the adjunct meets the regular rules of the Montana Code then they will be
covered for health insurance as normal procedure.
Graduate students are also subject to the regulations of the ACA, must be
managed accurately for the number of hours worked each week, and must be
held to no more than 29 hours per week on average for the employment portion
of their graduate contract.
FTE and Salaried Employees:
Many employees of the UM campus are considered salaried employees and
are recorded in the system with an appropriate FTE. If the FTE is less than
.5 FTE, then the employee has not been eligible for health insurance
coverage. We do not keep track of actual hours worked for these
individuals in the central payroll system.
If, however, these individuals are routinely working 20 hours or more per
week for 6 months or more then they should be covered for health
insurance according to the MCA. If they happen to work 30 hours or more
per week then they could be eligible for health insurance coverage under
the ACA.
We should not arbitrarily set the FTE at less than .5 FTE in order to avoid
the cost of health insurance. And under the ACA you will need to be
diligent about reporting the FTE of salaried employees (like Letter of
appointment and Contract Professionals) accurately.
Tracking Student Hours Across departments:
Human Resource Services will be responsible for tracking student hours
across campus and notifying departments when a student is working in
excess of the average hours allowed. HRS will notify all departments of a
student who works in multiple departments. It is up to the employing
department(s) to work with the students and keep the hours under the 30
hours per week threshold.
Campus departments will be notified whenever they have a student who is
working over the average number of hours – 30 – as identified by the
regulations of the ACA. All hours are recorded in the system and reports
will be analyzed after each payroll is completed.
International employees are treated exactly the same as any other in
regard to the ACA or MCA for health insurance coverage.

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