Senator Introduces Bill To Modify ACA’s Definition Of Full-Time Employee

Sen. Susan Collins (R-ME) has introduced a bill to modify the definition of full-time employee for purposes of the Patient Protection and Affordable Care Act (ACA). Collins introduced S. 701 on April 10.

“I am offering legislation correcting Obamacare’s definition of a ‘full-time’ employee to allow employees to work 40 hours a week without triggering penalties on the businesses that hire them,” Collins said in a statement upon introducing the bill.

Counting employees. Starting in 2014, employers employing at least a certain number of employees (generally 50 full-time employees and full-time equivalents) will be subject to the ACA’s employer shared responsibility provisions under Code Sec. 4980H. Under the provisions, if these employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees, they may be subject to an employer shared responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new health insurance exchanges.

Thirty hours a week. To be subject to these employer shared responsibility provisions, an employer must have at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). As defined by the statute, a full-time employee is an individual employed on average at least 30 hours per week (so half-time would be 15 hours per week).

“Because Obamacare uses an unreasonably low threshold of 30 hours a week to define ‘full-time’ employees, some businesses are restricting their employees to no more than 29 hours of work per week, to ensure that their workers are considered ‘part-time’ for purposes of Obamacare. This is a consequence of the substantial penalties Obamacare imposes on businesses that reach a threshold of 50 ‘full-time’ employees, unless they provide expensive health care coverage which many small businesses simply can’t afford,” according to Collins’ statement.

Proposed regulations. On Jan. 2, 2013, the IRS released proposed regulations on, among other issues, how to determine full-time employees. More than 500 comments were received on the regulations.

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