Opportunities for Part-time Staff and Adjunct Faculty Created by Healthcare Reform

By Gary L. Miller

In the Summer 2009 HR and Mission Discussion Forum, Sister Carol Keehan, DC, president and CEO of the Catholic Health Association of the United States wrote:

Catholic employers in particular should support a reformed [healthcare] system not only because of the economic consequences but because of the social justice implications. As a matter of human dignity, everyone is entitled to health care. Like any basic element of life, health care sustains us and should always be accessible and affordable for everyone—when they need it, where they need it, no exceptions, no interruptions.

With the passage of Patient Protection and Affordable Care Act (PPACA) last March, we are much closer to this goal of accessible and affordable healthcare for everyone. Colleges and universities that employ part-time staff and adjunct faculty may find this extension of coverage particularly pertinent. A survey conducted by the American Federation of Teachers found that only 28% of adjuncts report having health insurance provided through their college employer (Inside Higher Ed Online, March 22, 2010); this suggests that part-time employees at these institutions may be one source of the uninsured population.

When the PPACA-required state insurance exchanges become operational in 2014, many of those who are not currently eligible for an employer health plan and cannot afford an individual policy, or are denied insurance because of a pre-existing health condition, will find their situation dramatically improved. Through the state exchanges, they will have guaranteed access to comprehensive medical coverage with premiums that cannot be based on their health status. Additionally, those with family incomes at or below 400% of the Federal Poverty Level (FPL) will be eligible to receive premium subsidies. Those in the lowest income bracket eligible for government assistance with exchange-purchased insurance will pay a maximum premium of 3% of their household income with the balance being subsidized. As income levels escalate, the premium share required of participants gradually increases as a percent of household income to a maximum of 9.5%. For individuals and families at or under 250% of the FPL, government assistance will also be provided to offset plan out-of-pocket plan costs, such as deductibles and co-insurance.

Does PPACA fully resolve the health insurance access issues for part-time staff and adjunct faculty or must more be done? More must be done.

The Gap

Individuals with household incomes that exceed 400% of the FPL (roughly $46,000 for a single individual in 2014) will not be eligible for government-subsidized health insurance. Because part-time staff are typically paid on an hourly basis and adjuncts are frequently paid by the number of classes they teach, those part-timers who do the most work for their employers are also the most likely to become ineligible for the subsidy.

Having to pay the full premium for health insurance might not be too much of a problem for younger part-time employees, but it could be a challenge for older ones. For instance, the Kaiser Family Foundation estimates that in 2014, an exchange-purchased medical insurance plan for a single 35-year-old will run $3,962 annually in a medium cost region. However, because health plans on the state exchanges will be allowed to charge more for older employees, the full premium for a 55-year-old purchasing insurance on the exchange is estimated to be $8,495, not including out-of-pocket costs, such as deductibles and coinsurance.

So, in 2014, if a college or university only allows full-time faculty and staff into its group health plan, most of its part-timers will still be able to secure high-quality, well subsidized coverage through a state insurance exchange because the most that a subsidy-eligible individual will have to pay is 9.5% of his or her household income. Consider the 55-year-old we discussed above facing a premium of $8,495. Had this individual earned just a little less, say $45,000 (which is less than 400% of the FPL as of 2014) the premium would drop to a much more affordable amount - $4,275 - because of the government subsidy.

To re-cap, if a college or university does not provide group health plan coverage to part-time employees in 2014, most of them will still have access to affordable high-quality health plans through the state exchanges. However, those relatively few part-time staff and adjunct faculty with incomes that exceed 400% of the FPL may still have difficulty securing medical coverage.

The Challenge

What is a solution for a college or university that wants to close this gap without incurring the cost of covering part-time employees who have access to affordable high-quality coverage through a state exchange?

A Possible Solution

One possible solution is to create a separate group health plan for part-time staff and adjunct faculty who work at least a half-time schedule. This new plan would be designed like the type of plan on the exchange on which the government subsidy amounts are based (for those who are interested, this would be a plan that pays, on average, 70% of the cost of the covered benefits).

With most large employers, full-time employees pay a percent of the medical plan premium, usually 20 to 30%. The full-time plan would be unaffected and could continue to be structured in this way.

Those in the new part-time plan, however, would have different contribution rules. Their premium contributions would be based on a percent of household income, just as the premiums charged for insurance on the state exchanges will be based on a percent of household income. As stated above, for insurance purchased through an exchange, those in the lowest income bracket eligible for government assistance will pay a maximum premium of 3% of their household income with the balance being subsidized. As income increases, the premium required of participants gradually increases to a maximum of 9.5% of income. Also remember that the exchange subsidy is only available for those earning 400% or less of the FPL (roughly $46,000 for a single individual in 2014).

The percent of household income that would be charged for participating in the university part-time classification health plan would be a flat 10%. This is just slightly higher than the maximum premium of 9.5% required for insurance purchased through a state exchange.

Generally, PPACA does not allow employees who have access to an employer group plan to receive subsidized (both the premium subsidy and the cost-sharing subsidy) insurance on the state insurance exchanges. However, PPACA allows an exception for employees who have to pay more than 9.5% of their household income for employer coverage. Under the proposed plan, the premium cost for part-timers would be 10% of their household income; as such, eligibility for this new employer plan would not disqualify them from purchasing medical insurance through a state exchange and receiving the government premium subsidies discussed above.

The Outcome

With this new arrangement, most part-time employees would have to pay more for the university part-time plan (10% of income) than they would have to pay for insurance purchased through a state insurance exchange (remember that the maximum premium on the exchange is 9.5% of income and even less for lower-income individuals who would also be eligible for assistance with deductibles and co-insurance). The result: most part-time employees would not seek coverage in the university’s part-time plan because the exchange would be a better deal.

With this solution, the university would have a plan for those part-timers who need it; most typically, those who would not be eligible for subsidized coverage on the exchange. Recall the 55-year-old discussed earlier with an annual income of $46,000 facing an unsubsidized exchange premium of $8,495. The annual premium for this individual in the university’s plan by comparison would be much more affordable - $4,600 – putting healthcare within financial reach.

Why should a college or university make this effort to ensure that this small portion of their part-time employee population has access to affordable coverage? Given that these particular employees would be working at least a half-time schedule with many probably working closer to a full-time schedule, they are significant contributors to the colleges and universities where they are making this level of commitment. Moreover, because of the amount of work they are performing for their primary employer, even those with second jobs are unlikely to be making a level of commitment to their secondary employers that would qualify them for medical benefits. Beyond this, however, the new healthcare law envisions the federal government, state governments, insurers and large employers (those with more than 50 employees) all working together to achieve the important goal of near-universal medical coverage, a goal that serves the common good of the entire country. Because we know the government isn’t going to be helping these part-timers who fall in this gap, their access to health insurance becomes the responsibility of employers.

Although only a few part-time employees are likely to elect this special part-time health plan because of the required half-time commitment and because the subsidies make plans available through the state exchanges more attractive for those eligible for government assistance, the solution proposed in this column would nevertheless result in higher benefits costs for employers that currently do not extend affordable group medical plan coverage to part-timers. For this reason alone, some employers would reject this arrangement. However, I believe that most mission-based employers are interested in exploring ways to coordinate their internal strategies with PPACA’s vision of nearly universal healthcare coverage and will seize this opportunity created by the new law to help make healthcare “accessible and affordable for everyone—when they need it, where they need it, no exceptions, no interruptions.”

The opinions expressed in this column are mine alone and do not represent the opinions of DePaul University.
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The healthcare subsidy amounts were derived using the calculator on the Kaiser Family Foundation website: http://healthreform.kff.org/subsidycalculator.aspx .The March 22, 2010 Inside Higher Ed article mentioned above is available here: http://www.insidehighered.com/news/2010/03/22/adjunct.

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