New CBO Report Decreases Chances of Congress Changing ACA Definition of Full-Time Employee This Year

February 28, 2014

A new report from the Congressional Budget Office on the House bill (H.R. 2575) to increase the definition of full-time from 30 to 40 hours under the Affordable Care Act will likely make the bipartisan bill more challenging to pass the House next month, and even more so in the Senate this year.  According to the CBO, the proposal would result in one million people losing their employer-provided health care coverage.  In addition, federal spending would increase by almost $21 billion over ten years because of higher Medicaid and exchange subsidy spending.  Specifically, the bill would change the definition of full-time for determining which employers are "large" and therefore, subject to ACA penalties, and also which employees would trigger an ACA penalty.  Although CBO says "most employers would continue to offer coverage" because their employees prefer it over plans offered through the individual market or exchanges, it says the bill provides an "incentive for some employers to redefine work hours so that more employees would be categorized as part-time" and therefore not -eligible for employer-provided coverage.  The CBO also estimates H.R. 2575 would reduce employer penalties under the ACA by $63.4 billion over ten years because fewer employers would be subject to ACA penalties and fewer employees would trigger a penalty.