By Madelynn Coldiron
Kentucky public school employees get their health insurance through the state’s self-funded program, but districts – and school boards – are learning they still have some obligations under the new Affordable Care Act.
“School districts probably thought that they were not involved in the ACA or it was not a hot-button issue for them, but it really is,” said KSBA’s governmental relations director, Shannon Stiglitz. “They do have roles and responsibilities under the Affordable Care Act and they need to be aware of them or costly penalties could be incurred.”
For one, districts were required by Oct. 1 to notify all their employees, full-time or not, in writing about the state’s marketplace, or exchange, where health insurance coverage can be purchased. Employers with 50 or more employees and full-time equivalent employees must offer their full-time workers health insurance come Jan. 1, 2015.
Almost all Kentucky school districts employ at least that number of employees, said Susan Barkley, assistant director of the state education department’s Division of District Support, which has produced an ACA implementation guide for school districts.
School boards will have to make some decisions under the ACA, some of which may involve policy changes or actions such as a resolution, said Dara Bass, director of KSBA’s Policy and Procedures Service, which can provide these draft policies to districts at their request.
While there are aspects that can be complicated for school districts, the federal law does not necessarily mean a lot of new personnel will be added to a school system’s health insurance rolls.
“When we first started working on it, we thought there were going to be so many additional people that would be eligible for health insurance. But the more we got into it, the fewer we believe will be eligible because of the eligibility break point,” Barkley said.
That is the point at which districts would be required to offer the health insurance, based on whether an employee averages at least 30 hours of service per week or 130 hours of service per calendar month, or risk an IRS penalty under the ACA.
Eligibility determination and related aspects will be an annual process for school districts. There are time frames that must be set by districts, and boards can designate the superintendent or someone delegated by the superintendent to establish those, Bass said. The main one will delineate the period that will be the basis for annually determining who is a full-time employee. KDE is recommending a 12-month period ending Oct. 2, 2014, to coincide with the health insurance enrollment period – districts would look back one year from that point at their records to determine full-time employees.
For employees such as certified personnel with contracts, full-time status is obvious. But for positions like substitute teachers, paraprofessional coaches and part-time employees, it gets murkier.
“What’s very complicated for school districts is documenting actual time worked for this whole group of folks,” to determine which are full-time, Barkley said.
There are several different methods of documentation that can be used. KDE’s guidebook provides the details on those methods, along with examples. In many cases, a more simplified method of tracking days instead of hours will produce the same eligibility determination and “take a lot of the burden off,” Barkley said.
Once a district that is a large employer knows who is eligible, the ACA requires them to offer coverage for the employee and his or her dependent children. Barkley said it’s important that districts document annually that the offer is made and whether it was accepted or waived.
It’s also important to be accurate in determining an employee’s status, Stiglitz pointed out. If a school district worker who is eligible for insurance through the district instead purchases a health plan from the state’s marketplace, it is the school system that could face a big fine, she said.
To control costs, local boards can amend policy to limit the number of hours or days that “variable hour employees” such as substitute teachers or coaches may work to just under full-time status, Bass said. However, she said boards may want to consider hiring a cadre of full-time substitute teachers to promote consistency in the classroom, especially when regular teachers are out for extended periods, while limiting the time worked by other subs.
KDE also suggests another way to control costs: terminating substitute teachers who stop taking assignments. This becomes a problem when a substitute works enough hours one year to qualify for health insurance the next, but once insured, turns down assignments.
The ACA contains one other pitfall for school boards, with implications for the superintendent’s contract. Hefty penalties can be levied on a district if it pays the employee portion of its superintendent’s health insurance, effectively discriminating against the rest of the work force. Barkley said this can be addressed by either taxing the additional benefit or increasing the superintendent’s salary by a like amount.
It may be tempting for a board to try to avoid the calculations and documentation by adopting a blanket policy giving all employees health insurance, but that would be a bad idea, Barkley said. That’s because the district could be caught short if the legislature doesn’t approve enough money to cover those costs.
— To access the state education department’s ACA guide, click here. http://education.ky.gov/districts/Pages/default.aspx , click on District Financial Reporting and pull down to Health and Life Insurance Benefits. The implementation guide is linked on that page under Affordable Care Act.
Educational cooperatives and the Kentucky Association of School Business Officials also have been offering training on the ACA.