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Last updated on Thursday, January 23, 2014
(WASHINGTON D.C) - House Committee on Ways and Means Chairman Dave Camp (R-MI) today announced that the Committee will hold a hearing on the impact of the Affordable Care Act’s (ACA) employer mandate, which defines full-time employment as 30 hours per week for the purposes of applying the employer mandate.
The Committee will hear testimony from a broad cross section of industries affected by the rule. The hearing will take place on Tuesday, January 28, 2014, in 1100 Longworth House Office Building, beginning at 10:00 A.M.
In announcing the hearing, Chairman Camp stated, "Washington should be removing obstacles to individuals finding full-time work, not creating them. Instead, ObamaCare imposes large and disproportionate costs on employers and has created a new class of employees, the 'ObamaCare 29ers.' Many of these people have either lost or risk losing their full-time status and are being held back through no fault of their own but instead by a misguided law. As a result, they will see fewer hours and lower wages, and that is the opposite of the direction we need to be going to make our economy stronger for families and job creators."
The ACA imposes a requirement that employers with more than 50 full-time employees (FTEs) offer health coverage to their workers or be subject to one of two new penalty taxes. First, employers that do not offer qualified health insurance and have at least one employee receiving a tax credit for insurance through the Exchange are subject to a $2,000 penalty tax for each FTE in excess of the first 30. Second, employers who offer insurance that fails to meet the Federal government's standard for affordability are required to pay a penalty tax for every employee who receives a tax credit to purchase coverage through the Exchange. This penalty tax will equal the lesser of (1) $3,000 per employee who receives subsidized coverage in the Exchange or (2) the penalty tax the employer would have to pay if it did not offer health insurance (described above).
Prior to the enactment of the ACA, it was common practice for employers to use 40 hours as the definition of a full-time employee. However, under Internal Revenue Code section 4980H, enacted by the ACA, an FTE is defined as an employee who works at least 30 hours per week. Some commentators have expressed concern that this rule has created an incentive for employers to limit the number of employees whose hours exceed 30 hours per week because the penalty taxes applied are calculated based, in part, on the number of employees who exceed 30 hours. Industries that employ lower skill workers, and often provide entry-level opportunities for younger workers, are disproportionately affected by the 30-hour rule. For example, employers in the restaurant, franchise, home health, movie theater, retail and grocery industries have been reported to have reduced or are planning to reduce hours for their part-time workers as a result of the 30-hour rule. Additionally, school districts, community colleges and universities have reduced work hours for students, adjunct professors and support staff.
Today, more than 159 million Americans receive health coverage from their employers, making employer-sponsored insurance (ESI) the largest single source of private health coverage. Yet, not all businesses have the resources to provide coverage to their employees, and not all employees seek jobs for the sole purpose of receiving ESI.
While the Treasury Department has suspended enforcement of the employer mandate for 2014, the mandate and associated penalty taxes come into effect on January 1, 2015.
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