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Letter to the House Ways and Means Committee on the Saving American Workers Act of 2013

February 04, 2014

Dear Representative:

On behalf of the 3 million members of the National Education Association, and the students they serve, we urge you to vote NO on the Save American Workers Act of 2013 (H.R. 2575), scheduled to be voted on in committee today. We oppose the bill because we believe it would create a disincentive for employers to provide health care coverage, negatively impacting employer sponsored health insurance and harming families, children and educators who need coverage.

We believe that the Affordable Care Act’s shared responsibility for employers, sometimes referred to as the employer penalty, supports the overall goal of expanding quality, affordable coverage to all Americans.

We are concerned that this bill’s changes to the ACA's definition of what constitutes full-time employment from “on average at least 30 hours of service per week” monthly to an average of 40 hours per week monthly would adversely affect overall employer-sponsored health coverage. It also may lead to higher costs to the federal government as workers are passed off to exchanges and potentially become eligible for premium tax credits and cost-sharing reductions.

Additionally, if employer-based coverage is reduced, an even greater number of low-income individuals and their families in the 25 states that have refused to expand Medicaid will be unable to afford buying health benefits. In those states, childless adults whose incomes fall below 100 percent of the federal poverty line will not only be denied access to Medicaid coverage, but they will be ineligible for premium tax credits and cost-sharing reductions through a health insurance marketplace (exchange). Moving the full-time definition from 30 hours to 40 hours, as this bill does, would only expand the number of people hurt by this coverage gap.

We believe the bill misses the mark by substituting “40 hours” for “30 hours” because it would do nothing to stop employers’ misuse of the ACA’s employer penalty provisions as a justification for cutting employees’ hours. Experience with this portion of the ACA shows that one of the biggest implementation challenges in the education sector consists of making sure that employers and other health plan sponsors fully understand the law’s provisions related to shared responsibility for employers. For years, we have engaged with the Department of the Treasury and Internal Revenue Service to ensure that regulations on shared responsibility for employers work consistently well in the education sector, and believe regulators have taken important steps to correct this.

The changes contemplated in H.R. 2575, however, would simply shift the hours-related context in which these common errors take place:

  • mistakenly believing that the only way to avoid employer penalties is to cut employees’ hours to under 30 a week or to under six hours a day;
  • misunderstanding how and when to use proposed regulations related to an optional hours-counting method called the look-back measurement method;
  • overestimating the potential cost of complying with the law’s provisions on shared responsibility for employers; and
  • failing to incorporate into decision-making the statutory and regulatory provisions that ensure that this part of the ACA establishes possible penalties on large employers rather than an “employer mandate.”

These and other ACA-implementation errors can lead to exaggerated responses that hurt students, workers, and families alike. Unfortunately, H.R. 2575 would just shift the hours-related focal point for such errors.

Employers who take the time to understand the law and regulations as they currently stand can develop common sense, constructive, and consensual approaches to properly implementing the law.

Again, we urge you to vote NO on H.R. 2575. We would welcome the opportunity to work with the committee on this issue.

Sincerely,

 

Mary Kusler
Director of Government Relations