My Turn: The Affordable Care Act: Schools and adjuncts should be careful what they wish for
The Affordable Care Act requires employers with 50 or more full-time employees to offer health coverage to those employees as of Jan. 1. To avoid penalties, the coverage must meet affordability and minimum value requirements. The ACA defines full-time as averaging 30-plus hours per week.
Classifying certain employees as full-time or part-time has historically proven difficult. One such class of employees is the adjunct professor. Generally, adjuncts are professionals working in the community who also teach a course part time at a local college or university. However, as the economy has changed, a significant number of adjuncts depend upon these jobs as their primary income source. They teach several courses per semester and may be
full-time under the ACA.
Although there are exceptions, schools have not historically offered health coverage to most adjuncts; they are not typically considered full-time employees of the school. Thus, if the ACA requires a significant number of adjuncts to be covered that weren’t covered before, it may significantly impact a school’s budget – up to hundreds of thousands or even millions of dollars. This in an environment where many schools are cutting budgets to make ends meet and many education institutions are subject to the whims of state and federal funding.
As a result, schools are looking for ways to accurately determine, and in some cases limit, the number of hours worked by adjunct professors. Making this determination with accuracy, however, can be difficult. Clearly an adjunct professor works the hours she is in class, but adjuncts also work outside of class doing preparation and grading. The amount of non-class time required varies greatly from class to class, subject to subject, and school to school but historically, adjunct pay is keyed to class time, so non-class time has not been tracked closely.
The IRS published ACA regulations regarding some of the special concerns for educational employers. Those regulations were vague on how to count adjunct hours. The regulations state only that a method of counting hours must be “reasonable,” and that failing to count non-class time is not reasonable. Since the issuance of these regulations, many commentators have complained that we need more guidance from the IRS. Before adopting these complaints as their own, however, schools and adjuncts carefully consider the ramifications.
The IRS could approach such guidance as it did several years ago with the regulations under Section 409A of the Tax Code (governing executive compensation) and use it as a means to micromanage the economic relationship between schools and adjuncts. In such a case, flexibility would be limited and the parameters of the relationship would largely be defined by regulation, instead of by agreement.
The IRS is made up of tax experts, not school administrators and teachers; the agency is not in a position to know how much non-class time is required for the various courses. So, in addition to being complicated and unwieldy, the regulations would likely be a poor fit to the reality of educators.
The IRS could also take the approach of issuing one or more safe harbors, as it has with other parts of the ACA. One such safe harbor might state that a ratio of two non-class hours for every hour of class time would be presumed reasonable. Such a safe harbor may be helpful to some, but to others it would only add fuel to the already raging fire over limiting adjunct hours.
I believe the determination of how many hours an adjunct professor works should be left in the hands of those who know best: school administrators and teachers. For some situations, it may be a one-size-fits-all approach as the above hypothetical safe harbor describes. For others, the determination may be made on a case-by-case basis. In all circumstances, however, the decisions should be made without additional IRS regulation.
(Steve Gerlach is an attorney and member of Bernstein Shur’s Affordable Care Act Team in Portland, Maine.)
NOTE: This column was updated on May 2, 2013.