Many Colleges Change Benefits Over New Health-Care Law, Survey Finds

August 05, 2013

Many colleges expect their expenses to rise after new federal requirements for employers under President Obama's signature health-care law take effect, and some institutions are preparing for the new policy by changing their benefit plans to shift more costs to employees, according to survey results being released on Monday.

Among the 430 colleges and 23 higher-education systems that completed the online survey, conducted by the College and University Professional Association for Human Resources, 27 percent said they had increased the share of premium costs that employees must pay in 2013, in preparation for the law, and 17 percent said they had increased the share of costs that employees must pay for coverage of their dependents.

Twenty-three percent of institutions said they had adopted or enhanced a wellness program for employees. Other changes that respondents said they were planning or considering because of the new federal health-care requirement included increasing deductibles for in-network care and adding financial incentives to encourage healthy behavior. Those incentives have sometimes caused controversy among professors at colleges that have tried them.

The Patient Protection and Affordable Care Act requires organizations with more than 50 employees to provide health insurance to their employees who work 30 hours or more per week, or face financial penalties. That requirement was originally scheduled to take effect in January, and many colleges had begun to make changes in anticipation of that. But President Obama announced in July that he would delay the effective date of that part of the law by one year, to 2015.

Two-thirds of respondents to the survey, which was conducted from April through June, said they had already determined what financial effects the health-care law would have on their institution. Among the respondents who had made that determination, 60 percent said they expected costs to rise. The average increase they said they expected was 8 percent. The other 40 percent of respondents who had determined the financial effects said they expected their costs to remain the same.

Adjuncts' Eligibility

How the health-care law applies to adjunct instructors has been a matter of debate—and a difficult question for colleges and the federal government to answer. Adjuncts are paid based on the number of courses they teach, not by the hour, which makes it hard to calculate how much time they work for each class and whether they cross the 30-hour threshold that would make them eligible for benefits.

Only one in four of the institutions that responded to the survey said they had identified the criteria they will use to determine if part-time faculty members are working 30 hours or more per week.

Officials at the human-resources group said they had received a range of responses to open-ended questions about those criteria. Many people said that converting credit hours to actual hours worked was proving to be difficult and that they would like more guidance from the government.

The Internal Revenue Service acknowledged the special work circumstances of adjuncts when it released its proposed rules for employers and held a public meeting this past spring to discuss the issue further.

Instead of providing a formula for calculating adjuncts' hours, however, the IRS simply advised colleges to "use a reasonable method for crediting hours of service." It also stated that time spent working outside of the classroom, such as preparing for classes and grading assignments, should be considered.

Many colleges have limited the number of weekly hours part-time employees can work to keep them below the level at which the colleges would be required to provide health insurance. But close to half—47 percent—of survey respondents said that they did not plan to alter their use of part-time faculty members because of the health-care law. Fifty-three percent of responding institutions said they did not plan to change their use of part-time staff members.

The survey also found that a significant percentage of institutions offered health benefits to part-time employees who worked at least 20 hours per week, with 46 percent saying they offer those benefits to part-time faculty members and 39 percent saying they offer them to part-time staff members.

Coverage for Partners

The survey found that total premium costs for higher-education employees increased this year, over last year, by an average of just over 3 percent for employee-only coverage and by an average of 5 percent for coverage that included the employee and his or her family.

The average median premium in 2013 for the four major types of health-care plans colleges offer—preferred-provider organizations, health-maintenance organizations, point-of-service plans, and high-deductible health plans—was $6,249 for employee-only coverage and $16,602 for employee and family coverage.

Among those surveyed, 57 percent of institutions said they offered health-care benefits to same-sex partners of their employees, up from 46 percent in 2009. The percentage of institutions offering benefits to unmarried, opposite-sex partners also increased, to 42 percent this year from 37 percent in 2009.