(April 19, 2013) To avoid picking up the cost of additional health insurance under the Affordable Care Act, Ocean City government will spread out its part-time hours among more employees so those who do put in more hours at certain times of year will not fall into the federal government’s full-time category.
This will mean a drastic reduction in work time for some high-volume employees, the City Council was informed during budget sessions this week.
“We’ve added an additional five part-time employees to get everyone down to around 28 hours [per week],” Convention Center Director Larry Noccolino told council. “They took it very well. I was actually kind of surprised.”
Noccolino’s department has seven of the 40 municipal employees who are already over or in danger of going over the 1,560 hour-per-year threshold that will now entail a federal mandate that they receive full-time health insurance benefits. City Manager David Recor gave the totals to the council this week.
“This is a referendum handed down by the federal government, which is how we explained it to them,” Noccolino said. “We’re going to reduce their hours gradually up until around Labor Day weekend, by which time they’ll all be at around 28.
Some of those employees will see their hours cut by half and the lost work replaced by additional part-time or temporary employees, in order to avoid insurance liability to the city.
Medical benefits typically add 35 percent to the cost of an employee, according to city Budget Manager Jennie Knapp.
“I’m in the process of managing that now,” said Kate Gaddis of the city’s Recreation and Parks Department. “It’s a huge challenge, I will say. We will have to bring on more employees. It won’t change the total budget, but we do need to cover the hours … we have recreation programs going on seven days per week.”
However, this year’s Recreation and Parks budget already includes a reduction not just in individual employee hours, but also in overall service, to the city’s Ocean Bowl Skate Park because of the restrictions. The facility will be closed for January and February, with restricted hours in the spring and fall of 2014. This will slash the facility’s personnel budget by $20,000 and bring its employees in under the threshold.
Knapp said this week that a further $13,000 in reductions of staff and service are planned for the facility. Some of the park’s staff have historically worked more than 1,900 hours per year.
Early this year, the city indicated that it would be facing a considerable financial and personnel crunch from the federal Affordable Care Act – popularly known as “Obamacare.” The law will require, as of January 2014, that any employer with 50 or more employees provide health insurance to any worker who is considered to be full-time and non-seasonal.
Under the ACA, the definition of such an employee is one who is “reasonably expected” to work 30 or more hours per week. The IRS has advised employers that any employee who works a total of 1,560 hours or more in 2013 – i.e., 30 hours for 52 weeks – will thus have a reasonable expectation of getting insurance for 2014, unless they work for less than four months.
The Town of Ocean City already offers health insurance to what it considers to be full-time year-round employees. But what the city sees as full-time is no longer what the federal government sees as full-time.
The city’s department heads have been advised that they will need to use “management initiatives” to mitigate this effect. This means that the hours of the employees in question will have to be cut below a projected 1,560 for the year in order to avoid providing them with insurance.
Hiring additional part-time or temporary workers to pick up the slack is now a policy for most of the city’s departments, with the exception of the Ocean City Fire Department. The OCFD’s heavy dependence on overtime from EMS workers employed in other jurisdictions – some of whom work more than 2,000 hours per year in Ocean City alone – has meant that hiring additional full-time staff will actually be less expensive than paying overtime.
Although the department’s own study found 12 to be the ideal number of new full-time employees, the city will be funding six for the coming fiscal year.