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Guest Post: A Different Approach to the Affordable Care Act

Time & Attendance

As most districts already know, this is “go time.”

Like everyone else, we were initially surprised and overwhelmed by the Affordable Care Act requirements and determining what it meant for our organization.

After evaluating some traditional routes, we chose a slightly different process for our district, which I hope others will find helpful as we all navigate these waters together!

You Must Answer These Questions First:

The number one thing any organization needs to look at is tracking hours to determine who will be impacted.

Now that we’re required to offer benefits to all full-time employees (anyone working an average of 30 or more hours per week), employees who were formerly considered “part-time” may now be considered full-time under the Affordable Care Act (ACA). That means districts need to determine several things:

1. Who would qualify for benefits based on the hours they work?
2. Whom in this group are we already offering benefits to?
3. How many additional employees would we need to offer benefits to?
4. What is the fiscal impact of offering those additional benefits?

By first addressing these questions, you can determine if you even have an issue.

For example, you may determine that out of 4,500 employees, you have 2,000 who work 30 or more hours and would be considered “full-time.” Maybe all of those people already receive benefits. Fabulous — you don’t have an issue!

That is step one, but we’re far enough along in the timeline that, hopefully, organizations have already crossed that bridge, because certain reporting and communication deadlines have already occurred. If an organization has not “crossed these initial bridges,” they will want to seek assistance from a consultant or legal counsel as soon as possible to ensure compliance.

The Core Issue: Variable-Hour Employees

Most districts who have completed this first step have determined that the main employee group at the core of the issue is variable-hour employees.

Your certified staff and teachers make up the bulk of the staff in your school district and are likely already being offered benefits. Many of your hourly employees working a set schedule of 30 or more hours a week are also likely receiving benefits, so they are not an issue. Also, many hourly employees  bus drivers, cafeteria workers, etc.  work a set schedule of less than 30 hours, so they are not an issue, either. It’s regarding employees that work variable schedules with variable hours where districts run into some questions.

We can’t go into a school year and know exactly how many hours those employees will work. We can estimate and budget based on trends, but we cannot be certain which variable-hour employees will work more than others until after they have worked.

So how do we track the hours? How do we ensure that we’re prepared financially to provide benefits if we have to? What follows then is a panic attack upon realizing the reality of how daunting that task is!

Frequent Decisions: Outsourcing and Limiting

So what are districts doing? A common decision is outsourcing  if you outsource, that company has to worry about tracking and paying benefits instead of you. With this option, however, you will pay a premium. For some districts, this may be the best and most logical choice.

A lot of districts are going for another popular option, and that’s limiting, across the board, all substitutes or any variable-hour employees to 29 hours per week. But then you’re taking a group of people that have the potential to work more, and you’re saying, “You can’t work more than 29 hours.”

Of course, that hits people in their pockets. Plus, from a district-level standpoint, instruction is now led by different people every week. The inconsistency in instruction is a huge issue if you’re limiting, because anyone that’s on a six-week maternity leave, for example, is going to have seven or eight substitutes. Is that what’s best for the students in the classrooms? Clearly not.

These two options leave many districts facing a dilemma: do we outsource but pay a premium for that service or do we risk instruction time by limiting hours?

Another Option: Reactive vs. Proactive

So we are doing something a little bit different!

We were one of the first large districts to outsource our substitutes, starting in 2005. At the time, that was a great decision. But now (right about the time that everyone else is deciding to outsource) we decided to bring it back in-house.

We have a number of reasons, but a primary one is the cost to the district.

If we continued to outsource, we would pay a premium markup on every substitute that works for us. Every hour that every substitute works we would be paying a markup to cover benefits and cost of service of the outsourced agency, and we have 500 substitutes. That adds up to a very large total that may not be necessary.

Our biggest concern was: what if of the 500 substitutes only 100 actually need benefits? Why pay a premium on 400 people I didn’t need to  is that the best use of our dollars?

We decided to investigate taking that same money we spent on outsourcing, bringing it back in-house and building a fund  a resource to be reactionary. Typically, being proactive is your best option in any situation, but in this case, I think reactive is better.

Because of the latest revision to the law, districts need to offer benefits to only 70% of employees, beginning with their insurance plan renewal date in the year 2015. That percentage probably represents just the certified staff for most districts, providing an additional buffer.

We can monitor the hours with tools like Absence & Substitute Management and Time & Attendance (together, now Frontline Absence & Time), use the “2015 window” to better forecast how many people we actually need to offer benefits to, and then use our fund to offer benefits if we need to.

Beginning with the 2016 plan year, companies have to offer benefits to 95% of their full-time employees. But if you have 4,500 employees and you realize after a year of tracking that out of 500 substitutes only 100 qualify for benefits, then you are already offering to 95% of your employees.

If you are tracking and watching, you can be reactionary. You may not even be in a situation where you need to worry about benefits  or you may have enough savings now to cover the benefits if necessary.

Being Smart About Limiting Hours

Because limiting hours across the board negatively impacts instruction, we took a different approach to this, as well.

The first few weeks of school, we only have about 200 absences a day. We often hear complaints during that time that substitutes can’t get enough jobs. That got us thinking.

What if we restricted hours only during the low-volume times to give more people the opportunity to work?

To test this idea, we built a substitute calendar that looks at the entire school year. We discovered that if we restrict substitute hours to 29 per week only during the first two months of school, a substitute can work every single hour possible the rest of the year and only hit a weekly average of 28.9 hours  under the threshold for benefits.

For long term assignments during this time, substitutes can be assigned to a “reverse calendar,” putting the modified weeks in the second versus first semester. This method will ensure that students have the same substitute each semester.

Then, we took the savings we gained by moving the process in-house, and we increased pay for the substitutes who had their hours restricted during those low-peak times. Now our substitutes are making the same amount of money in 10 months that they were making before annually, and we have no danger of going over the average.

The Tools To Make It Happen

Quite frankly, Absence & Substitute Management and Time & Attendance are the reasons we can do this.

You can’t react when you don’t know what information you’re reacting to. Without systems like Absence & Substitute Management and Time & Attendance, you can’t do that. The systems are flexible enough to give us the information to be effectively reactive, and that’s the very reason why this solution is going to work.

For some people, a staffing company is the best solution. But for us, we hired a team of four extraordinary people, offered additional training and pay raises for our substitutes, and we’re still saving $350,000 a year.

Another Tricky Catch: Paying Per Day or Half Day

Many districts pay by day or half-day. While this method is often easier, it can bring some hidden costs under the Affordable Care Act.

If a substitute works only six hours, a district may pay the substitute for a full day – let’s say seven and a half hours. If a district is not tracking the actual hours worked (six hours), an auditor could evaluate the hours you paid the substitute.

Even though the substitute worked only six hours, without a way to verify the actual hours worked, the auditor could count the seven and a half hours – and that could unexpectedly push some of your substitutes into the realm of qualifying for benefits.

To prevent this situation, districts should consider either switching to hourly pay or implementing a system to track actual hours worked.

We brought in Time & Attendance for this purpose – Time & Attendance captures the actual hours worked so we can accurately pay our substitutes by the hours worked and present an auditor with proof of the actual hours worked.

Do Your Homework and Give it a Try!

My senior leadership team and I have talked to consultant after consultant and lawyer after lawyer, and we all feel very confident about our solution. The worst case scenario is that we pay for benefits; at least that helps our people, and at the end of the day, that’s why we do what we do.

If you look at the math and don’t let it be daunting, and if you have the tools to track employee hours, you can find creative solutions that work for your district and your substitute teachers without sacrificing instruction.


Want a template to try Cydney’s solution in your own district? Subscribe to our blog below and we’ll alert you when it’s available!

Cydney Miller

Cydney is a Solutions Consulting Manager for Frontline Education, a leading provider of K-12 employee management software. Cydney most recently served as the HR Director at Clarksville-Montgomery County School System in Tennessee. She is committed to supporting school districts with their strategic human capital managementn needs, including staffing, HR and substitute fulfillment.