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IRS guidance on health care law clarifies formula for counting adjunct hours

(More) Clarity on Adjunct Hours
February 11, 2014

WASHINGTON -- The Obama administration on Monday released its long-awaited final guidance on how colleges should calculate the hours of adjunct instructors and student workers for purposes of the new federal mandate that employers provide health insurance to those who work more than 30 hours a week.

The upshot of the complicated regulation from the Treasury Department and the Internal Revenue Service:

  • On adjuncts, colleges will be considered on solid ground if they credit instructors for 1 ¼ hours of preparation time for each hour they spend in the classroom, and instructors should be credited for any time they spend in office hours or other required meeting time.
  • On student workers, the IRS opted to exclude work-study employment from any count of work hours, but the administration declined to provide an exemption for student workers over all. As a result, colleges and universities will be required to provide health insurance to teaching and research assistants who work more than 30 hours a week.

Adjunct Hours

The issues of how to count the hours of part-time instructors and student workers have consumed college officials and faculty groups for much of the last 18 months, ever since it became clear that the Affordable Care Act definition of a full-time employee as working 30 hours or more a week was leading some colleges to limit the hours of adjunct faculty members, so they fell short of the 30-hour mark.

All that the government said in its initial January 2013 guidance about the employer mandate under the health care law was that colleges needed to use "reasonable" methods to count adjuncts' hours.

In federal testimony and at conferences, college administrators and faculty advocates have debated the appropriate definition of "reasonable," with a focus on calculating the time that instructors spend on their jobs beyond their actual hours in the classroom. The American Council on Education, higher education's umbrella association and main lobbying group, proposed a ratio of one hour of outside time for each classroom hour, while many faculty advocates have pushed for a ratio of 2:1 or more.

In its new regulation, published as part of a complex 227-page final rule in today's Federal Register, the government said that it would be too complex to count actual hours, and it rejected proposals to treat instructors as full time only if they were assigned course loads equivalent or close to those of full-time instructors at their institutions.

The administration continued to say that given the "wide variation of work patterns, duties, and circumstances" at different colleges, institutions should continue to have a good deal of flexibility in defining what counts as "reasonable."

But in the "interest of predictability and ease of administration in crediting hours of service for purposes" of the health care law, the agencies said, the regulation establishes as "one (but not the only)" reasonable definition a count of 2.25 hours of work for each classroom hour taught. "[I]n addition to crediting an hour of service for each hour teaching in the classroom, this method would credit an additional 1 ¼ hours service" for "related tasks such as class preparation and grading of examinations or papers."

Separately, instructors should also be credited with an hour of service for each additional hour they spend outside of the classroom on duties they are "required to perform (such as required office hours or required attendance at faculty meetings," the regulation states.

The guidance states that the ratio -- which would essentially serve as a "safe harbor" under which institutions can qualify under the law -- "may be relied upon at least through the end of 2015."

By choosing a ratio of 1 ¼ hours of additional service for each classroom hour, the government comes slightly higher than the 1:1 ratio that the higher education associations sought, and quite a bit lower than the ratio of 2:1 or higher promoted by many faculty advocates.

David S. Baime, vice president for government relations and research at the American Association of Community Colleges, praised administration officials for paying "very close attention to the institutional and financial realities that our colleges are facing." He said community colleges appreciated both the continued flexibility and the setting of a safe harbor under which, in the association's initial analysis, "the vast majority of our adjunct faculty, under currernt teaching loads, would not be qualifying" for health insurance, Baime said.

Maria Maisto, president and executive director of New Faculty Majority, said she, too, appreciated that the administration had left lots of room for flexibility, which she hoped would "force a lot of really interesting conversations" on campuses. "I think most people would agree that it is reasonable for employers to actually talk to and involve employees in thinking about how those workers can, and do, perform their work most effectively, and not to simply mandate from above how that work is understood and performed," she added.

Maisto said she was also pleased that the administration appeared to have set the floor for a "reasonable" ratio above the lower 1:1 ratio that the college associations were suggesting.

She envisioned a good deal of confusion on the provision granting an hour of time for all required non-teaching activities, however, noting that her own contract at Cuyahoga Community College requires her to participate in professional development and to respond to students' questions and requests on an "as-needed basis." "How does this regulation account for requirements like that?" she wondered.

Student Workers

The adjunct issue has received most of the higher education-related attention about the employer mandate, but the final regulations have significant implications for campuses that employ significant numbers of undergraduate and graduate students, too.

Higher education groups had urged the administration to exempt student workers altogether from the employer mandate, given that many of them would be covered under the health care law's policies governing student health plans and coverage for those up to age 26 on their parents' policies. The groups also requested an exemption for students involved in work study programs.

The updated guidance grants the latter exemption for hours of work study, given, it states, that "the federal work study program, as a federally subsidized financial aid program, is distinct from traditional employment in that its primary purpose is to advance education."

But all other student work for an educational organization must be counted as hours of service for purposes of the health care mandate, Treasury and IRS said.

Steven Bloom, director of federal relations at the American Council on Education, said higher ed groups thought it made sense to exempt graduate student workers, given that their work as teaching assistants and lab workers is generally treated as part of their education under the Fair Labor Standards Act. He said the new guidance is likely to force institutions that employ graduate students as TAs or research assistants -- and don't currently offer them health insurance as part of their graduate student packages -- to start counting their hours.

The guidance also includes a potentially confounding approach to students who work as interns. The new regulation exempts work conducted by interns as hours of service under the health care employer mandate -- but only "to the extent that the student does not receive, and is not entitled to, payment in connection with those hours."

So in other words, at a time when there is a push to encourage employers to provide paid as opposed to unpaid internships, the new health care guidance appears to let employers off the hook from offering health insurance to interns if they are unpaid -- but not if they are paid.

 

 

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