WHITE PAPER
ON
IMPLEMENTING THE “PAY OR PLAY”
PROVISIONS OF THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT
FOR
MINNESOTA STATE COLLEGES AND UNIVERSITIES
CHIEF FINANCIAL OFFICERS CONFERENCE
December 2013
The passage of the Patient Protection and Affordable Care Act (“ACA”) has dramatically altered
the health insurance landscape nationwide. The ACA has several key components, including the
development of public health care exchanges and new requirements on employers to provide
insurance coverage. The Employer Shared Responsibility provisions of the ACA, commonly
known as the Pay or Play provisions, go into effect on January 1, 2015 and require covered
employers to offer insurance coverage to all full time employees, defined as those that work on
average thirty (30) hours a week or more. Full time hires must be offered insurance within 90
days of hire. For variable hour or part time employees, a review of actual hours worked must
take place. The Pay or Play provisions are composed of three time periods:
Measurement Period: A look back period in which an employee’s actual hours worked
are averaged to determine if they meet the 30 hour per week threshold. The measurement
period may be up to 12 months.
Administration Period: A period for the employer to review hours worked during the
Measuring Period
Stability Period: A period following the Administration Period where full time
employees are entitled to insurance coverage. The length of the Stability period must
match the length of the Measurement Period.
Minnesota Management and Budget (MMB) and the State Employee Group Insurance Plan
(SEGIP) have been the lead agencies charged with implementation of the ACA statewide. MMB
formed a statewide task force charged with developing a strategic plan for ensuring the smooth
roll out of the ACA within the parameters of the state insurance plan and the State’s collective
bargaining agreements. MnSCU has been represented on this task force by representatives from
Human Resources and Labor Relations.
As a practical matter, most state employees are already insurance eligible pursuant to their
collective bargaining agreement or compensation plan. The true impact of these new
requirements will be felt with part time employees with multiple appointments or those
appointment types, such as emergency, temporary, or student workers, that have traditionally
been excluded from insurance coverage.
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Initial Decisions as to Implementation
Through the work of the task force, several decisions have been made as to statewide
implementation of the Pay or Play provisions.
 For purposes of the ACA, all three branches (Executive, Judicial, and Legislative)
combined will be considered a single employer. The University of Minnesota is
considered a separate employer.
 The State will use a 12 month measurement period and thus a 12 month stability period.
Though a longer stability period could increase costs associated with continued
insurance, a longer measurement period will allow a greater period of time in which an
employees work hours are averaged. A longer measurement period will be particularly
helpful in handling a more seasonally- or semester-based workforce.
 In order to meet the January 1, 2015 effective date, the first measurement period began
September 25, 2013. See Exhibit below:
 Changes will need to be made to SEMA4 to reflect how certain leaves are counted for
ACA purposes. All paid leave counts as “time worked” for the measurement of full time
employment. Some unpaid leaves, including Family Medical Leave Act (FMLA) and
Uniformed Services Employment and Reemployment Rights Act (USERRA), count as
“time worked,” as well.
 A guideline will be put in place prior to January 1, 2015 outlining how health insurance
costs will be handled when an employee holds appointments with multiple state agencies.
A DRAFT guideline has been developed and is attached as Appendix A.
 One of the unique challenges will be sequential appointments. Agency A may have
employed the individual over the past 11 months with an average of 34 hours per week.
When the employee takes a new job with Agency B, the new agency inherits the work
history already completed during the measurement period. So, even if Agency B only
hires the employee for 5 hours a week, they may still qualify based on the entire
measurement period. Some state entities are, for budget planning purposes, going with
the assumption that all new hires will be insurance eligible.
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 MMB is working on a report that will serve as a tracking tool for state agencies to
monitor how many of their employees are reaching the 30 hour per week threshold. The
hope is that the report will have the functionality to track appointments in multiple
agencies and provide up to date work hour averages for each employee. MnSCU is
working with its own HR data specialists to see what reporting is necessary in SCUPPS.
Issues Unique to MnSCU
There are two aspects of statewide implementation of the ACA that provide challenges unique to
MnSCU. First, MnSCU has a large contingent of adjunct faculty members that work on a per
credit basis without regard to the actual number of hours the faculty member engaged in work
during the week. Second, the ACA applies to all employees working for the enterprise, which
includes student workers, whether or not those student workers are regarded as “public
employees” for purposes of the Public Employee Labor Relations Act (PELRA) or funded
exclusively through student financial aid.
Adjunct Faculty
How to judge how many hours an adjunct faculty member works during a given week is a
challenge. Thus far, the only guidance issued by the federal government suggests that employers
“be reasonable” in their calculation of hours. In March 2013, the American Council on
Education (ACE) petitioned the Internal Revenue Service seeking a safe harbor provision for
determining adjunct faculty eligibility based on a ratio of out of classroom work to in classroom
work. Most discussion within the higher education community has centered on this type of ratio
calculation, though there is little consensus as to what ratio to use. At one end of the spectrum,
the ACE is proposing a 1:1 ratio and on the other end, the American Association of University
Professors is proposing a 3:1 ration.
The current thinking is that MnSCU will implement a 2:1 ratio for adjunct faculty members.
Example: A faculty member teaches two three credit courses in the fall and a four credit
course in the spring.
Fall: 6 hours in-classroom credit per week + 12 hours out-of-classroom credit per
week = 18 hours per week average
Spring: 4 hours in-classroom credit per week + 8 hours out-of-classroom credit
per week = 12 hours per week average
Of course, two major factors to consider are multiple appointments (adjunct work at multiple
institutions, work at other state agencies, or a combination of both) and the full 12 months of
averaging that will ultimately reduce year-long averages of adjunct faculty members not
employed over summer or during academic breaks.
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Additionally, MnSCU has not fully resolved how to credit hours for non-instructional
assignments, though there will likely be a FTE calculation based on a predetermined full-time
salary. One possible process would be as follows (salaries are purely illustrative):

Adjunct paid $6,500 in Fall to develop three courses in American Studies

Associate Professor Salary $60,000/9 month appointment.

Fall pay of $6,500 / $30,000 Fall base pay = .22 FTE = 8.8 hours per week
Student Workers
Currently, the ACA does not distinguish between student workers and traditional employees.
The ACA adopts the definition of employee found in the Employee Retirement Income Security
Act (ERISA) which is “any individual employed by an employer.” (29 U.S.C. §1002(6)). Again
ACE is seeking a safe harbor to address the issue of student workers, and particularly work study
and other financial aid-based employment.
A few additional thoughts on student workers:
 Students would need to meet the 30 hours per week threshold in order to qualify
for insurance.
 Students who are also employed by multiple MnSCU institutions or other state
agencies would have their work time aggregated for purposes of the ACA.
 Currently, none of the reports being created for SEMA4 or SCUPPS would pull
student worker data, as that is currently stored in ISRS.
On the Horizon
Full federal regulations have not yet been issued on the pay or play provisions. The temporary
regulations fail to adequately address adjunct faculty and student workers. The HR division will
be monitoring any developments that arise.
Currently, the implementation date is set for January 1, 2015. As the initial implementation date
was January 1, 2014 and it has already been rescheduled once, there is always the potential that
further adjustments to the implementation schedule will be made by the federal government.
MnSCU will need to be responsive and adaptive as things remain fluid.
Once implementation begins, the federal government will likely need to begin sorting through
various employer practices and set parameters around concepts, such as measurement of adjunct
workloads, that have been left to a reasonableness standard. Once that process begins, MnSCU
will be in a better position to compare its own practices with the rest of the higher education
community.
Submitted by Bill Brady, System Director, Employee Benefits and Compensation
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