(March 15, 2013) With 2013 being used as the “test” year to determine one’s obligations once the 2014 implementation of the Affordable Care Act – popularly known as “Obamacare” – rolls around, the Town of Ocean City will likely be doing some major re-shuffling of staff this coming season to avoid adding some employees to its health care plan.
“We are really having to get very creative as to how to estimate additional staff this summer, and what it may come down to is having twice as many part-time personnel as we used to,” said Ocean City Fire Department Chief Chris Larmore, whose department will likely be one of the most heavily affected.
“There is an immense amount of time currently going into figuring that out.”
The key tenet of the federal legislation creates a “pay or play” system that encourages employers to provide affordable health plans to their employees. Specifically, a $2,000 per employee, per year penalty will be imposed on all large businesses that do not provide their full-time employees with appropriate health coverage, beginning Jan. 1, 2014.
In order to qualify as being adequate, an employee’s coverage must not cost more than 9.5 percent of their wages, but cover at least 60 percent of projected average health care costs.
“Large businesses” are classified as those who have more than 50 full-time employees, or the equivalent in part-time workers’ hours, which the Town of Ocean City obviously has. But what will matter for the resort is the element of the federal statute that requires to whom exactly such a “large employer” must provide insurance.
Under the ACA, any employee “reasonably expected” to work 30 or more hours per week must be provided necessary coverage if their employer is of adequate size. This coverage must be provided within 90 days of employment, meaning that all those who work for more than three months qualify.
Under the current interpretation of the law, issued by the IRS, any employee who works more than 1,560 hours in 2013 (30 hours per week, multiplied by 52 weeks per year) will qualify for coverage beginning in 2014.
According to City Manager David Recor’s budget presentation earlier this month, 47 city employees who are currently not considered full-time are expected to meet the ACA threshold to receive health benefits.
In order to avoid paying the penalty for these employees – or change its health plan to accommodate their costs and incomes – the city will have to keep their hours under the threshold this year.
Larmore said 14 of those employees are in the OCFD, which is in a unique position because “two thirds of the personnel who work part-time for us have full-time jobs somewhere else, where they can’t work around our schedule.”
Firefighters and medical personnel who are primarily employed by other municipalities, such as in Salisbury or even the Baltimore metro area, frequently pick up shifts in Ocean City. Given that shifts are 12 or 24 hours, those who work more than one or two rotations in the resort per week would qualify for its insurance.
Whether the city would be penalized for not providing insurance to those who likely have it from another employer is unknown, but “what we have been instructed as department heads is that we may be responsible to make sure that simply doesn’t happen,” Larmore said.
“Right now, I believe that we’re going to have to restrict their hours so that they won’t exceed that maximum amount of 1,560 [hours]. What we’re going to have to do is hire a significant number of people to make up the hours that those people were working. What that number is going to be, or how we’re going to find those people … is going to be a real challenge.”
Similar measures will likely have to be taken in other departments where the city uses per-hour or per-shift workers who consistently work longer schedules but do not receive benefits.
As with the fire department, Public Works Director Hal Adkins said that the transportation division of his department is likely to be re-arranged, given that most of the city’s bus drivers are paid per-shift and have other driving jobs in the area. Only seven city bus drivers are salaried employees with benefits, Adkins said.
