Business leaders and human resources and employee benefits professionals are well aware of potential minefields for employer group health plan sponsors under the Affordable Care Act (ACA). Large employer plan sponsors are careful to invest significant time and resources to avoid triggering any number of employer tax penalties.
Health care reform can even impact employers’ routine employment decisions and staffing actions. Well before the ACA, employers were called up to make complex hiring and staffing decisions that met the needs of their clients/customers and allowed them to recruit and retain appropriate employees at a reasonable cost. In some industries, managing large numbers of part-time employees has long been standard practice.
The lure of hiring part-time employees has arguably never been greater. The ACA now requires “applicable large employers” to offer affordable, minimum value group health plan coverage to only employees working 30 or more hours per week and their dependents. Given the cost to employers of providing this type of robust health plan coverage, it is natural for employers to spend more time than ever in evaluating whether certain employees may be able to work under that threshold.
While empirical evidence suggests that many employers have considered ACA-related costs in scheduling their employees, the risks of such practices remain difficult to quantify or predict, as this is an unsettled area of the law. There is good reason to proceed with caution. For example, ERISA Section 510 prohibits employers from discharging or otherwise discriminating against an ERISA plan participant for the purpose of interfering with any right the participant or beneficiary “may become entitled to” under ERISA or the plan.
How will this ERISA requirement be interpreted by the courts in the ACA context? If an employee who has enjoyed full-time employment for many years suddenly finds his hours reduced and therefore loses group health plan coverage, might his employer face ERISA Section 510 claims? Is health coverage for any given future period of time really a “right” under ERISA or under an employer’s plan? Time will tell. The first lawsuits are just now beginning to be filed, and many of us expect the Supreme Court to ultimately decide these questions within the next 2-3 years.
In the meantime, prudent employers are left to carefully monitor sources of possible exposure for this type of workforce management that is driven by a desire to avoid ACA penalties.