Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
Massachusetts paved the way for the nation’s Affordable Care Act (ACA) by passing comprehensive health care reform back in 2006.
Because the state law has already been in effect for several years, employers here – including municipalities – may face less of a challenge in adapting to the new rules than those in other states. Still, Massachusetts municipalities will need to become familiar with certain provisions if they are to avoid penalties.
Employer mandate
Much of the reaction to the ACA at the national level, particularly in the business community, has centered upon the “employer mandate,” which will require employers with at least 50 full-time employees to provide health coverage or face penalties. To avoid penalties under the ACA, that coverage must meet “minimum value standards” and must be “affordable” as those concepts are defined in the law.
The public sector health coverage statute in Massachusetts (Chapter 32B) has a threshold for eligibility (20 hours, regularly, per week) that is lower than the ACA level (average of 30 hours per week). That said, the ACA may require some municipal employers to offer coverage to certain employees (particularly some substitute teachers) to whom they may not currently be providing coverage.
Municipalities still have time to plan and be prepared for the employer mandate rollout. For governmental units in Massachusetts with 100 or more employees and July 1 to June 30 plan years, the mandate will not generally apply until July 1, 2015. For employers with between 50 and 100 employees and the same plan year, it will generally be effective on July 1, 2016.
Temporary, variable-hour and seasonal employees
Under Chapter 32B, an employee is not rendered ineligible for coverage because his or her employment is not permanent. Chapter 32B does not, however, include any durational limit for determining which temporary employees are eligible for coverage. While it would not seem reasonable to require an employer to provide coverage to an employee who is hired for a two-week project, what of a long-term substitute who is hired in August to work the entire school year in place of a permanent teacher who is on child-rearing leave?
Probably due to the lack of a fixed durational requirement for eligibility in Chapter 32B, cities, towns and districts have used differing standards for determining the eligibility of substitute teachers and other non-permanent employees.
The ACA, on the other hand, provides a durational standard. If, at the time of hire, an employer reasonably knows that a new employee (who is hired into a position that is not “seasonal”) will average at least 30 hours per week, the employee must be offered coverage no later than the first day of the fourth full calendar month of employment.
An employer is often not sure whether existing employees or new hires will actually average 30 hours per week. The ACA terms these employees “variable-hour employees” and provides the employer with two options for determining whether they are eligible. One is to calculate the employee’s hours each month and determine on a monthly basis whether the employee is eligible for coverage (the “monthly measurement” method). The other, more practical, option is to adopt a measurement period of up to 12 months and to determine in arrears whether the employee will be eligible for future coverage (the “look-back” method). Those methods for determining eligibility are described in regulations issued pursuant to the ACA.
A related issue involves the eligibility of “seasonal” employees.
Seasonal employees are excluded from eligibility for coverage under Chapter 32B, but the term is never defined in the statute.
The regulations promulgated under the ACA, however, define the term “seasonal” as an employee who is hired into a position for which the customary annual employment is six months or less.
Substitute teachers, for example, are not seasonal employees for purposes of the ACA, as a teaching position has customary annual employment of longer than six months.
Even if an employer expects at the time of hire that a seasonal employee will be employed for more than three months, the employer will not be required to provide the seasonal employee with coverage after three months. Instead, the eligibility of a seasonal employee may be determined under the “look-back” measurement method in the same way that the eligibility of a variable-hour employee would be determined. For this and other reasons, an employer will generally want to adopt a 12-month measurement period.
[For a more comprehensive analysis of the employer mandate, see the ACA Update on the MIIA website (emiia.org) by clicking on the “Health Care Reform” tab.]
Paul Mulkern is an attorney who specializes in employment and health insurance law.