Substitute teachers and health insurance: Who is eligible and when?
By Paul Mulkern
Which substitute teachers are eligible for health insurance, and when are they eligible?
It seems like it should be a straightforward query, but the answer, and statutory background, is complex. As is the case for other Massachusetts municipal employees, there are two eligibility standards that apply to substitute teachers: state and federal. Determining where state and federal laws converge (and diverge) is challenging – and worthy of careful evaluation at the local level.
State eligibility standard
Under Chapter 32B of the Massachusetts General Laws, a public sector employee is eligible for group health insurance coverage if his or her duties “require not less than 20 hours, regularly … during the regular work week of permanent or temporary employment; provided further that no seasonal employee or emergency employees shall be included.”
Thus, under Chapter 32B, a municipal employee will be eligible for coverage if he or she regularly works at least 20 hours per week. The fact that the employment is of “temporary” duration does not affect his or her eligibility, though “seasonal” and “emergency” employees are not eligible for coverage.
The Chapter 32B eligibility standard, however, fails to address two major issues:
1. For how long must an employee be employed, or expect to be employed, in order to be eligible?
2. How is “seasonal” employment defined?
For example, if an employee is hired to work for two weeks at 40 hours each week, it could be claimed that the employee worked “regularly” – at least 20 hours per week – for both of those weeks. It would not make sense, however, to offer an employee health coverage if he or she was only going to be employed for two weeks. Chapter 32B does not address this.
Further, while providing that “seasonal” and “emergency” employees are not eligible, Chapter 32B does not define either term. Some municipalities have addressed this issue in their own insurance regulations, and/or have defined the terms “seasonal employee” and “emergency employee.”
As Chapter 32B does not include a durational standard for determining eligibility, and there have been no appellate court cases that have specifically addressed the eligibility of substitute teachers under Chapter 32B, Massachusetts school districts have historically used different standards for determining whether and when substitute teachers are eligible for health coverage. Many districts have offered coverage to certain long-term substitutes, although the length of the assignment required for coverage varies. Some districts have limited the hours that day-by-day substitutes may work so that they do not regularly work more than 20 hours per week.
Federal eligibility standard
The Affordable Care Act establishes a health insurance eligibility standard for all public and private employers with 50 or more employees. Under the ACA, if an employer reasonably expects at the time of an employee’s hire that the employee will average at least 30 hours per week of employment, then that employee must be provided health coverage no later than the first day of the employee’s fourth full calendar month of employment.
ACA eligibility standards apply to all employees of covered employers, but Massachusetts public employers must be particularly concerned about the impact of the ACA on substitute teachers.
Regulations issued pursuant to the ACA define a “seasonal employee” as one who is hired into a position for which the customary annual employment is six months or less. As the customary annual employment of the teaching position is longer than six months, the regulations make it clear that a substitute teacher is not considered a seasonal employee, regardless of how long he or she is hired to work.
The ACA recognizes that employers will not always know at the time of hiring how long an employment will last, or how many hours the employee will average. Therefore, the ACA allows employers to choose from two options for determining the eligibility of these employees: monthly measurement or the “look-back method.”
Under the monthly measurement method, the employer determines on a monthly basis whether an employee is eligible for coverage. As an employee may average 30 hours per week for one month, less than 30 for the next, and then 30 hours for a third, this measurement method is not practical for many employers.
Under the look-back method, the employer adopts a measurement period for determining whether employees average at least 30 hours per week. The measurement period is followed by a stability period (generally of the same length), during which an employee is eligible for coverage if he or she averaged 30 hours per week during the measurement period – or ineligible if he or she worked less – regardless of how many hours the employee actually works during the stability period.
Although the ACA permits employers to use a measurement period of shorter duration, many school districts use a 12-month measurement period that aligns with the employer’s health plan year. The weeks of the summer school vacation period must be excluded when calculating the average hours worked by substitute teachers. So a district using a 12-month measurement period with a 10-week summer break would calculate average hours for substitute teachers by dividing hours worked by 42 (rather than 52).
Two types of substitutes
The impact of both state and federal standards varies for the two types of substitute teachers; long-term and variable (day-by-day).
Long-term substitutes: Some substitutes are hired to fill-in on a full-time basis for regular teachers who are expected to be on leave for extended periods (e.g., maternity or medical leave). If, at the time an individual is hired into a long-term position, the district reasonably expects the substitute to average at least 30 hours per week, then the ACA requires that the employee be offered coverage no later than the first day of the fourth full calendar month of employment. Coverage must continue for as long as the employee averages 30 hours per week.
While the ACA does not require that the employee’s coverage be effective until the fourth month, it could be argued that Chapter 32B requires that coverage be offered at an earlier date. Accordingly, some municipal employers are not requiring long-term substitutes to wait, and are providing coverage effective within the same timeframe as other employees hired into benefits-eligible positions.
Day-by-day substitutes: Many substitute teachers work intermittently on a day-by-day basis. If a day-by-day substitute regularly works fewer than 20 hours per week, he or she will not be eligible for health coverage. A coverage problem develops, however, when a day-to-day substitute winds up regularly working more than 20 hours per week and, particularly, when he or she averages at least 30 hours per week over the employer’s measurement period.
While the ACA permits the employer to wait until the end of the measurement period to determine whether the variable hour employee is eligible, Chapter 32B may not allow that same delay in coverage when it is clear that the employee is “regularly” working at least 20 hours per week.
Employers should periodically review the hours of their variable hour employees (such as day-by-day substitutes) to determine whether they have regularly worked at least 20 hours per week and whether it can reasonably be expected that they will continue to regularly work at least 20 hours per week. If so, Chapter 32B may require that they be offered coverage, even earlier than coverage would be required by the ACA (at the end of the measurement period). (If the hours worked by certain substitutes occasionally exceed 20 in emergency situations, this should not expose the employer to a coverage obligation as long as the substitute isn’t “regularly” working at least 20 hours per week.)
Some districts have decided to limit the hours worked by day-by-day substitutes to no more than 20 per week. Another approach could be to have a small number of substitutes who are expected to be employed every day (or most days) and offer them health coverage, while limiting hours of all other substitutes. It may also be helpful to implement a reporting requirement for substitute hours worked to ensure accurate monitoring.
School districts are advised to take a close look at both the state and federal laws regarding health insurance for substitutes and develop policies for how to address the requirements locally. As always, it is best to consult with municipal and/or labor counsel when developing such policies.
Paul Mulkern is a municipal labor law attorney.