The U.S. House of Representatives last month approved legislation that would increase the Affordable Care Act threshold for designating a worker as “full-time” from an average of 30 hours a week to 40 hours.  Twelve House Democrats joined all the Republicans in the vote.

The bill now goes to the Senate where its prospects are uncertain. President Obama has threatened to veto the House-passed bill if it reaches his desk.  

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ACA Definition of Full-Time Employee 40 Hours?

Tue Feb 3, 2015

The U.S. House of Representatives last month approved legislation that would increase the Affordable Care Act threshold for designating a worker as “full-time” from an average of 30 hours a week to 40 hours.  Twelve House Democrats joined all the Republicans in the vote.

The bill now goes to the Senate where its prospects are uncertain. President Obama has threatened to veto the House-passed bill if it reaches his desk.

The “Save the American Workers Act” enjoys the strong support of the employer community. In letters to senators and representatives business groups like the American Benefits Council and the US Chamber of Commerce urged lawmakers to support the bill.  And a “More Time for Full Time” coalition, representing restaurants, theaters, truck stop operators, hotels and others has endorsed the House-passed bill.

Employer groups have targeted the 30-hour rule because it may be the most vexing of the many ACA compliance challenges employers must manage in 2015. They say that the rule increases employer compensation costs by requiring employers to offer affordable and minimum value health coverage to millions more workers and dependents. The 30-hour threshold also triggers the employer “play or pay” mandate, involving complex classification systems of look-back measurement and stability periods to determine full-time status.

Pros and Cons—

As usual with proposals to scale back the Affordable Care Act, there are arguments for and against changing the 30-hour test.

Senators and representatives in favor, mostly those determined to chip away at “Obamacare,” argue that the 30-hour rule encourages employers to hire part-timers instead of full-timers to avoid triggering the “play or pay” coverage mandate. They cite additional employer costs, including to local governments, for having to offer ACA-compliant health coverage to workers formerly ineligible. Regal Entertainment, the nation’s largest movie theater chain, some Burger King franchisees and Florida’s Brevard County are among many “29ers,” employers cutting hours to below 30 a week to avoid the Affordable Care Act mandate.

Those opposing a change, including President Obama, acknowledge the problem but say that raising the threshold to 40 hours would cause far more families to lose health coverage, since millions more employees average 40 hours than 30 and could see work time cut by 15 minutes a day.

The White House also points to an important fiscal concern: the proposed change from 30 to 40 hours could increase the projected federal budget deficit by as much as $53 billion over ten years due to reduced employer penalties for not offering ACA-compliant coverage.

2015 Outlook—

Even though last November’s elections gave Republicans a 54-46 voting advantage over Democrats in the Senate, approval of the House-passed 40-hour bill is no slam dunk. The minority party can “filibuster” or endlessly debate measures it opposes, so a simple majority is not sufficient to approve legislation. Only if 60 senators vote to end debate can filibusters be halted, meaning that at least six Senate Democrats must join all 54 Republicans in voting to stop debate and send a bill to the President.

Assuming six Senate Democrats break with the President and vote to end a filibuster and pass the 40-hour bill, which is possible, President Obama would almost certainly veto it. And because a two-thirds vote is required in the House and the Senate to override a veto and there is no chance 66 Senators would vote to override, it looks like legislation to raise the ACA workweek threshold cannot become law in 2015.

That said, a Wild Card exists that could change the outlook for the 30-hour rule and other controversial ACA provisions: this spring’s Supreme Court decision in the King vs. Burrell case on whether enrollees in federal exchanges are entitled to government subsidies. If a majority of Justices decide, probably this June, that the Affordable Care Act as written does not permit such subsidies the White House and congressional Democrats will need Republicans to pass legislation to clarify the 2010 law—and fast. This would give Republicans a powerful bargaining chip to change the threshold for full-time status and perhaps much more.