H.R. 3798 - Save American Workers Act of 2017

Floor Situation

On Friday, September 14, 2018, the House will consider H.R. 3798, the Save American Workers Act of 2017, under a rule. This bill was introduced on September 14, 2017, by Rep. Jackie Walorski (R-IN), and was referred to the House Committee on Ways and Means.

Summary

H.R. 3798 amends the definition of "full-time employee" for purposes of the employer mandate under the Patient Protection and Affordable Care Act from an employee who is employed on average at least 30 hours of service a week to 40 hours a week.  

The bill also creates a retroactive moratorium on the employer mandate, delays the implementation of the excise tax on high health cost employer-sponsored health coverage (commonly referred to as the "Cadillac tax”) until after December 31, 2022, repeals the excise tax on indoor tanning services, and changes the requirement for health insurance coverage statements to individuals to be available only upon request.

Background

Definition of "full-time employee”:

Under the Affordable Care Act (ACA), employers with more than 50 full-time equivalent workers must offer health insurance to their employees or face a penalty. Notably, the law defined full-time status as an average of 30 hours per week, significantly below the traditional 40 hour work week that most employers and workers are accustomed to.  As a result, employers have an incentive to keep part-time workers below 30 hours a week or even shift full-time workers to part-time to avoid the cost of coverage or the penalty. Unfortunately, there are many stories of various private companies cutting hours to comply, as well as public employees for certain cities and states.l[1]

Part-time workers take home less pay with reduced hours, and could look for more part-time jobs to make up for the difference. The strict limit on hours can also jeopardize the scheduling flexibility currently available through many part-time jobs. In many hourly positions, workers are able to swap shifts and change their hours from week to week in order to accommodate family needs or emergencies. But with a 30-hour definition of full-time work, this flexibility may be scaled back by employers, as workers cycle in and out of full-time status from week to week, altering their calculation for employer mandate liability.  This impact is especially evident in sectors that hire seasonal workforces.[2] Many workers voluntarily seek part-time or hourly jobs because of the flexibility they offer.

Moratorium on the Employer Mandate:

Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to age 26, or be subject to penalties. This is known as the employer mandate. It applies to employers with 50* or more full-time employees, and/or full-time equivalents (FTEs).

Tax on High-Cost Employer-Sponsored Coverage:

Originally scheduled to take effect in 2018 but now delayed until 2022,  the ACA’s 40% excise tax, also referred to as the "Cadillac tax," is to be assessed on the aggregate cost of employer-sponsored health coverage that exceeds a certain dollar threshold. The thresholds are adjusted for eligible retirees, workers in certain high-risk professions, and plans whose demographics differ significantly from the national workforce. The thresholds are also adjusted for inflation.[3]

Indoor Tanning Services Excise Tax:

Effective beginning in 2010, the ACA imposed a 10% excise tax on the price of indoor tanning services provided by certain businesses. The tax does not apply to spray-on tanning services, topical creams and lotions, or phototherapy services performed by a licensed medical professional. There is also an exemption for "qualified physical fitness facilities," such as gyms or fitness clubs, which offer tanning as an incidental service to members.[4]

Insurance Coverage Statement:

Providers of health insurance coverage are required to send a statement to their covered individuals describing the duration and type of coverage.This statement is used by individuals to demonstrate compliance with the ACA’s individual mandate. Now that the individual mandate has been effectively repealed beginning in 2019, this statement is no longer necessary.

Cost

A Congressional Budget Office (CBO) estimate is not currently available.

Staff Contact

For questions or further information please contact Ryan Hofmann with the House Republican Policy Committee by email or at 2-6674.