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The IRS has released final rules clarifying which employees at colleges and universities are considered full time under the Affordable Care Act.

Navigating health reform

Higher Education: Counting Full-Time Faculty Under the Affordable Care Act

  • William LeClaire
  • 8/11/2014

Higher education organizations now have additional clarification on how to comply with the Affordable Care Act’s (ACA) employer shared responsibility requirements. The IRS final rules explain that higher education institutions should count employees who only work during the academic year as full time for the calendar year.

The ACA requires large employers to offer their full-time employees an affordable, minimum level of health insurance after January 1, 2015, or potentially face penalties. A large employer is one with 50 or more full-time employees and full-time equivalents (FTE). However, some large employers — those with 50 to 99 full-time employees or FTEs — who meet additional requirements will have until 2016 to comply.

This means that colleges and universities must know which employees meet the law’s definition of full-time status (average of 30 hours a week or more). Even though many educational employees work only during the school year, the IRS says in its final rules that those who meet the definition of full time during the school year should be treated as full-time for the full year.

Employment break rules

The IRS also provides an employment break rule:

  • An individual should be treated as a continuing employee (not a rehire) unless that person had no hours of service for 26 weeks or more.
  • If a staff member did not work for at least four consecutive weeks and that period is longer than the time the person worked immediately before the break, the employee can be treated as a rehire.

Calculating school breaks with new employees

For new employees, an educational organization cannot take the likelihood of an employment break period (generally defined as a period of at least four consecutive weeks during which no services will be performed) into account when determining the expected average hours of service. Therefore, organizations may have to disregard summer breaks and breaks between semesters when determining the expected average hours for new employees.

For example, depending on the length of the school’s break periods, expected hours may have to be averaged over eight, nine, or 10 months (rather than 12 months), which will increase the expected average hours for the same job.

Adjunct professors and student workers

In addition, the rules provide schools with guidance on how to fairly attribute hours to adjunct professors to determine whether or not they should be treated as full-time employees for purposes of health care benefits.

At this time, the IRS is directing employers to establish a “reasonable method” for crediting hours of service that is consistent with the health care reform law. As an option, the IRS has indicated that 2.25 hours of service per week can be credited for each hour of teaching or classroom time. Students in federal or state-sponsored work-study programs should not be counted as employees.