McCoy Faulkner collects $81 a day as a substitute teacher in the Wake County Public School System. A mere sub, he has no benefits.
The 62-year-old former Raleigh police officer shells out $580 a month for an individual insurance policy, more than half his monthly pay. The full-time teachers for whom Faulkner fills in, however, are eligible for free health insurance, with no monthly premiums, through their employer.
That’s why Faulkner was looking forward to the Patient Protection and Affordable Care Act, figuring he was the kind of person that the health care reform law was designed to help. Under the new law, anyone who works 30 hours or more a week for a large business will be eligible for employer-sponsored health care.
But instead of adding subs like Faulkner to its health care plan, the school system is looking for ways to avoid doing so. Wake is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1.
The reason: If just a third of the system’s subs were to qualify for employer-sponsored insurance, it would cost Wake schools about $5.2 million, chief business officer David Neter said.
“We’ll have some difficult decisions to make,” Neter said. “Something else would have to get cut. It’s equivalent to 20 full-time teachers or 40 teaching assistants. That’s how significant it is.”
The system is among the many employers across the country seeking ways to dodge the higher health care expenses that will arrive in January as a result of the Affordable Care Act.
While many businesses are scaling back work hours to keep part-timers out of the company insurance plan, others are not hiring so as not to cross the 50-employee definition for large employers – the federal threshold for having to insure full-time employees. Still other businesses are mulling the option of scotching company health coverage altogether and paying a federal fine instead.
The calculations often come down to counting full-time versus part-time workers, adjustments driven by legal definitions in the new law, said Brydon DeWitt, a lawyer at the Williams Mullen firm who advises businesses on the health care law.
DeWitt predicts some businesses will restructure themselves to employ mostly, or only, part-timers.
“They will have to monitor work hours like a hawk,” DeWitt said. “ ‘That person cannot work another hour this week because we can’t have him exceeding the threshold.’ ”
Faulkner, who lives in Wake Forest, said the response of Wake schools is frustrating for many reasons. Some subs had hoped to qualify for the system’s premium insurance plan. Others, however, already have insurance through spouses and simply want to put in a full week’s work.
“I never expected the Wake County Public School System to circumvent the intent of the law,” Faulkner said. “The biggest complaint I hear is from people who don’t need the insurance but will be limited in the amount of time they can work.”
The new law
The federal law is intended to reduce the numbers of uninsured by making health coverage more affordable for those who had been shut out of the health care system. The law prohibits long-accepted insurance practices, such as denying coverage for pre-existing conditions, charging more to insure women and significantly marking up premiums for older people.
It also makes insurance mandatory, with fines for individuals and companies for failing to comply.
It’s expected that some will opt for the fines. Nancy Adams, owner of Piggly Wiggly grocery stores in Sanford and in Broadway, said that’s one option under consideration for her business. The $2,000-per-worker fine would apply to just five full-time employees at the two Piggly Wiggly stores, amounting to $10,000 a year, she said, because the law exempts the first 30 workers from the fine.
Adams said the company would save considerably and likely give workers a $2-an-hour pay raise to help them buy individual policies on a health care exchange. Such exchanges, created by the Affordable Care Act, are designed for those who buy coverage on their own.
Adams’ grocery business has 86 employees and currently provides insurance to 31 of them at a cost of about $120,000 a year. Insuring all those who work at least 30 hours would raise the cost to about $165,000, she said.
“We don’t have the pockets to pay an extra $45,000 for health insurance,” Adams said. “It’s huge.”
Employees who work just over 30 hours are most vulnerable to a reduction in work time, according to an analysis of labor data done in February by the University of California Berkeley’s Labor Center. The jobs most affected span the economic spectrum: restaurants, nursing homes, health care, retail, education and building services.
In April, 9.9 million U.S. workers logged 30 to 34 hours a week, according to the U.S. Bureau of Labors Statistics.
The most recent figures from North Carolina, from 2011, show 291,000 workers – or 7.3 percent of the state’s labor force – working 30 to 34 hours.
Some are self-employed, and others work for small businesses that are exempt from the Affordable Care Act’s insurance mandate. But many are classified as full-timers at large companies and fall into the category of those who are likely to have their schedules reduced.
One of those is Susanne Brown, 42, a stay-at-home-mom who lives in Wake Forest and has been subbing in Wake schools for the past four years.
Brown typically works three days a week, well below the 30-hour trigger point. But she said on occasion she has worked a five-day week or several weeks in a row to fill in for a teacher on leave, an option that would no longer be open to her if Wake elects to limit substitute hours.
“That would be disappointing,” Brown said. “It would be disappointing for the teacher – they like the consistency as well.”
Those who can’t buy insurance through work will have a backup option: buying coverage through a health exchange. The Affordable Care Act even includes federal subsidies for people at certain income levels to offset insurance costs. The subsidies are available to individuals making as much as $45,960 a year, and for a family of four making as much as $94,200 a year – well within range for substitute teachers and Piggly Wiggly clerks.
Nearly 900,000 North Carolinians are eligible for these subsidies, according to a recent report issued by the N.C. Institute of Medicine, a nonpartisan research organization in Morrisville.
Health exchange details are not out yet, so Faulkner doesn’t know how that option will compare to the Wake schools plan, but he doubts the exchanges will be able to compete with the county’s health plan.
“People who need the benefits won’t be able to get in,” Faulkner said. “They were hoping they would be able to have insurance, which is what the law was designed to do.”