United Benefit Advisors Insight and Analysis Blog

Universities Get Educated about PPACA

By Jennifer Stanley, In-house Counsel & Compliance Officer for iaCONSULTING, a UBA Partner Firm
  Sep 18, 2014 11:09:00 AM

describe the imageIt is back to school time!  Universities and colleges across the nation have dedicated time and resources to course planning and curriculum evaluation, but have they prepared for the Patient Protection and Affordable Care Act (PPACA)?  Have they run the numbers, solved for unknown variables, and double-checked their answers?

PPACA requires applicable large employers - employers that employ fifty or more full-time and full-time equivalent employees during business days of the preceding calendar year - to offer full-time employees and their dependents affordable, minimum value coverage or pay penalties (Play or Pay) beginning in 2015 or 2016.  In general, a full-time employee means, with respect to a calendar month, an employee who is employed an average of at least thirty (30) hours of service per week, or one hundred thirty (130) hours of service per calendar month, with an employer.  An hour of service is each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer; and each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.  Excluded from the hours of service calculation include those hours which are performed by a bona fide volunteer, hours performed by students as part of a federal work-study program or a substantially similar state program, or any hour for services to the extent the compensation for those services constitutes income from sources outside the United States. 

Universities employ students in various capacities – tutors, bookstore and recreation center workers, graduate assistants, resident hall advisors, and recruitment team members.  Beginning with benefit year 2015, universities will have to offer student workers health insurance if they qualify as full-time employees, pursuant to Play or Pay.  With Play or Pay drawing nearer, universities should be well into the preparatory phase.  Preparation includes reviewing policies which should limit the number of hours students can work per week for each semester.  Universities should also ensure an enforcement mechanism is in place for such policies.  Educating supervisors and student workers about the maximum number of hours a student can work is integral.  For tutors, bookstore and recreation center workers, and graduate assistants, this all is pretty straight forward.  The formula is simple.  Students who “punch-in” for fewer than 30 hours per week are not full-time employees and do not have to be offered university group health insurance.   However, there are some student worker positions that present a more difficult set of circumstances, with latent variables, that must be addressed.  Answering incorrectly could result in penalties under Play or Pay and penalties under federal wage and hour laws.

Tracking hours of service for resident hall advisors and students part of recruitment teams, for example, involves more than “punching a time clock.”  On some campuses, resident hall advisors are students that live in on-campus dormitories and have a myriad of duties – attend mandatory employer-called meetings, resolve roommate disputes, organize dormitory and/or floor social gatherings, and offer general advice based on past experience.  Some universities give resident hall advisors stipends or pay them for a fixed amount of hours and may include housing as part of compensation.  Resident hall student employees could be “on-call” 24/7. 

Another group of student workers are students who are part of university recruitment teams whereby students travel to high schools or summer camps and recruit for the university.  A typical week of work would look something like: On Monday, student recruitment team members get in a university van and travel to a different location.  They spend the week with high school students in a camp-like environment, dining and sleeping in dormitories, hosting and participating in fellowship events.  On Friday, they get back in the university van and return home.  They could be paid for X number of hours per week plus meals and lodging during the time they are away.

How do universities track the hours of service for different student worker categories like the student recruitment team members or the resident hall advisors?  The preamble to the Play or Pay final regulations states that the definition of hour of service for purposes of crediting hours of service tracks the Department of Labor’s regulations under a qualified retirement plan, with certain modifications.  For employees paid on an hourly basis, an employer is required to calculate actual hours of service from records of hours worked and hours for which payment is made or due.  It would be prudent for universities to consult a wage and hour attorney for guidance, especially when addressing the intricacies of non-exempt employees, on-call employees, and situations that involve traveling away from home.  Leaving these variables unknown can result in penalties under both Play or Pay and wage and hour laws.

As a side note, the student worker issue does have the attention of some congressmen.  The Student Worker Exemption Act provides a blanket exemption for student workers who would be entitled to university-sponsored health insurance, thereby relieving universities of their obligation to offer student workers coverage as is required per PPACA.  Regardless of the traction, the wage and hour issues should still be examined – a problem that has costly consequences if it is answered incorrectly.

For more help in determining how many employees you have for various purposes under the Patient Protection and Affordable Care Act, request UBA’s guide, “Counting Employees Under PPACA”.

Topics: PPACA, PPACA Affordable Care Act, college, university, The Student Worker Exemption Act