Friday, June 29, 2012

Could the Affordable Care Act Help Cure HigherEd of Adjunctivitis?

NFM VP Matt Williams explores the implications of the Affordable Care Act for Adjuncts at AkronAdjunct, reposted below in full.
The U.S. Supreme Court upheld healthcare reform today, and the decision promises to change the landscape of the healthcare industry in America.  While much of the focus of the debate has been on the individual mandate, the employer mandate may have some surprising (and potentially positive) implications for the nation’s nearly 1 million adjunct faculty who often teach for poverty wages and are frequently denied access to employer sponsored health insurance. 
The controversial health care law includes an employer mandate that requires large employers (i.e., those with more than 50 full-time employees or full-time equivalents) to provide health insurance to its employees or pay a penalty. 
Virtually every college and university in the country would qualify as a large employer under the law, though I have been unable to ascertain whether there exist any exemptions to the applicability of certain provisions of the law to organs of state and local governments (e.g., state supported universities and local community colleges).  Having uncovered no such exclusions, I presume that the law applies equally to colleges and universities with the possible exception of certain religious schools. 

In an effort to curtail an anticipated free-rider effect, a so-called free-rider penalty will be levied upon organizations that qualify as large businesses under the act and where at least one employee of the organization receives the government subsidy (premium credits) provided for under the law. To qualify for this subsidy the employee must meet two conditions. First, their household income must be less than 400% of the Federal Poverty Level (amount varies with family size). Secondly, the employee’s portion of the insurance premium on the employer’s plan must exceed 9.5% of the employee’s household income. 
So let’s examine a real world scenario based upon the employment conditions at The University of Akron, a state university located in Akron, Ohio.  Again, I will reiterate that I believe that the law applies equally to private and public sector organizations, though the states attorneys general who fought the law will likely continue to fight to curtail its application now that it has been upheld as constitutional.There are roughly 1,000 part-time faculty teaching at The University of Akron.  They earn on average about $800 per credit hour, and they are limited by university rules to teaching a maximum of 21 credit hours per academic year.  This yields an annual salary of $16,800 per year for working 7/8 of a full-time equivalent load.  This is $6,250 below the 2012 federal poverty level for a family of four.  It is $75,400 below the 4 times the federal poverty level required for eligibility for the subsidy under the healthcare law.  It would appear that the vast majority of part-time faculty members at The University of Akron meet this first income requirement.  Let’s call it 70% for the sake of illustration (we’ll use this percentage in a calculation later). 
As to the second condition requiring that the employee’s portion of the insurance premium, the low wages paid to part-time faculty at The University of Akron drive this calculation. And it doesn’t work in the university’s favor. 9.5% of an annual $16,800 wage equals $1,596 per year.  The annual employee contribution for the university’s PPO plan is $2,193 for an employee earning $28,000 per year or less.  Only one employee of the university need qualify under this provision for the institution to be subject to the rule. 
The free-rider penalty can be substantial. If the organization otherwise provides health insurance to employees, its annual penalties will be equal to the lesser of the number of subsidized employees (i.e., those receiving premium credits) x $3,000 OR the number of all employees in the organization minus 30 x $2,000. 
It is reprehensible that adjunct/contingent faculty are paid such low wages and denied access to such basic benefits as health insurance.  The law that was affirmed today by the U.S. Supreme Court may have a pronounced impact on the business model to which higher education has become addicted.  Here’s why… 
The penalties that will accrue to organizations that fail to meet the employer mandate are substantial. If 700 of UA’s 1,000 part-time faculty are eligible for the subsidy, this would yield a total cost to the university of $2.1 million. Of course, those are small potatoes when compared to the aggregate compensation of the university’s president and 36 or so vice presidents (in excess of $5 million per year in cash compensation alone, which is more than 50% of what UA’s 1,000 part-time faculty earn as a group)…to say nothing of its athletics program or the proposed $400 million physical expansion that comes on the recently completed half a billion dollars in physical campus improvements. 
So perhaps schools like The University of Akron will decide that paying the subsidy is the price that they must pay in order to continue abusing adjuncts.  After all, $2.1 million absorbed by 30,000 or so students is only about $70 per student. I can imagine the forthcoming student fee appearing as a line item on the tuition bill. It will read something like Administrative Health and Wellness Regulatory Recovery Fee. 
Ever the optimist, I cannot help but hope that the levying of such penalties–or the mere threat of the same–will serve to focus attention on the fact that our colleges and universities are riding free on the backs of hardworking, highly educated teachers who earn, at least at my former institution, less than manual laborers who tend to the grounds of an ever-expanding campus. All the while these adjuncts are being denied the opportunity for a better life that is depicted in glossy viewbooks. The groundskeeper toils away with the hope that his child may obtain the college education that he was not afforded. For his sake and the sake of his child, he should hope that they don’t become an adjunct, lest they exchange sweat and gloves for the ball and chain of perpetual poverty and debt.
"Obamacare will force higher education reform. Will adjuncts benefit?posted June 28, 2012 by Matt Williams


  1. Matt makes a number of excellent points that are not to be found in any other discussions of the Affordable Care Act that I've seen. If his reading of the law is correct, this could provide an enormous benefit to hundreds of thousands of adjunct faculty around the country.
    ~Peter in New Paltz, NY

  2. Or perhaps it will encourage higher education institutions to consider adjunct faculty "contracted labor/services", pay them similar to sub-contractors and submit 1099 tax documents to them at the end of the year, pushing ALL taxes upon the adjunct further reducing their take home pay and pushing them deeper into, as Mr. Williams notes, "perpetual poverty and debt."

    Now is certainly the time to advocate for the deplorable conditions faced by many adjunct faculty to ensure these most valuable and critically important individuals are protected.

  3. Anon ~ that an attempt would be made was my thought too. However won't be easy. Short version: the IRS won't like it and there are recent precedents against such a move. Many for-profits originally paid adjunct faculty that way to avoid #SS and other benefits but had to stop. No doubt such a move would also depend on labor laws in individual states.

    In any case, we should not be surprised to see a well financed lobbying effort to re-clasify not just adjuncts but other categories precarious labor as "contracted."

    Any tentative legal opinions out there?

    1. I think Vanessa is right. I'm not a lawyer, but if adjuncts were reclassified as individual contractors, it would change things considerably -- the applicable laws are different. I would also think they would then officially fall under the purview of recent DOL/IRS regulations as well as proposed legislation like Sherrod Brown's Employee Misclassification Prevention Act (see, all of which are trying to address some of the ways employers evade their obligations.

    2. This is already done by some schools. One College in NJ that specializes in Distance Ed classifies us as 'independent contractors', pay us a gross amount, and gives us a 1099. We are responsible for both halves of the SS tax and all other taxes. We had to apply for a sales tax number from the state along with other documentation as an independent contractor. We come under the state 'pay for play' laws that limit the amount of money we can earn from that College, and we have to fill out reams of reports each year to the state. However there is a positive side to this. We can file a Schedule C on our federal income tax which allows us to claim some deductions , otherwise not allowable, which in many cases offset the additional taxes and may even provide a tax benefir to the filer. Many years ago I challenged this system but have since come to realize the benefits that accrue.

    3. I've noticed a number of adjuncts in LinkedIn groups referring to themselves as independent contractors and favoring it for the advantages you mention. I don't know all the factors but also know a number of for profits had to drop that option, could have been accreditation reasons, student loans eligibility.

      It would be naive to think colleges and universities have not been considering implications well before the decision came down.

  4. This is an interesting possibility. Health care affects adjuncts in our institution in several ways, including a novel one that has emerged in contract negotiations.

    Our institution is in the midst of negotiating contracts with all of it personnel. The first thing the administration stated was the contract needed to be cost neutral (No overall increase). The next was that they wanted to cut healthcare costs and wanted us to figure out how to do it. Whatever we could save would go into pay increases.

    Adjuncts here do not get paid health care, although we can purchase it at group rates on a pre-tax basis. So, the givebacks do not have much affect on adjuncts. However, avoiding these concessions is the primary motivation of full time faculty and staff. That does affect us.

    This is the first year that adjunct pay has been one of the top 5 negotiating points. In the past, it has typically been something like number 20 of 25. But the health care issue has pushed it aside. It is possible that full time faculty and staff will settle for no pay increase rather than lose health benefits. This leaves adjuncts with nothing.

    The irony is that if all adjuncts joined the union, we would be the majority and could control the issues. But many are afraid or apathetic even though they are already paying an agency fee instead of dues. Less than 1/3 are voting members.

    Some of us could benefit if the act works as you stated. But some of us will be retired before the fighting over it ends.

    1. The ways in which adjuncts will be affected by the Affordable Care Act are numerous, different, and complex. In Ohio part-time faculty are denied by statute the ability to bargain collectively with their state university employers. So this particular area has not really affected us. That is, we are denied even a seat at the bargaining table.

      The conflict in interests of full-time and part-time (i.e., contingent) faculty is a topic of much discussion. An emerging trend is the rise of contingent-only bargaining units represented by the UAW, SEIU, the Steelworkers, etc. It's not hard to understand why this is happening...given that the traditional education unions have produced little in terms of actual results for adjunct/contingent faculty.

      In blended bargaining units adjunct faculty could, indeed, exert greater influence over their circumstances by becoming more active. Let's hope that the continued work of organizations like New Faculty Majority will convince more adjuncts to take up their own cause in the interest of improving their circumstances.

  5. Anne, member of New Faculty MajorityJune 30, 2012 at 9:00 PM

    Reclassifying adjuncts as contractual employees in order to avoid having to provide them with health insurance could be very dicey for institutions which have always insisted that these positions are contingent upon funding and enrollment. Strictly speaking, an appointment letter that says you can be terminated at a moment's notice for any reason or for no reason, is not really a "contract." Contracts hold both parties accountable for the terms they agree to. If I contracted to replace someone's barn roof for $5,000, I would get a deposit of $2,500. If he fired me halfway through the process, I could sue for what he owed me, AND I could apply for and receive unemployment compensation. Working as an adjunct is much riskier. Colleges and universities have not been accountable. It is high time they were forced to be.

    1. Amen. In this Kingdom of Fear (reference to a Hunter S. Thompson book - I know, not very scholarly of me), many adjuncts feel just "lucky to have a job," especially in this economy. Employers realize this is a powerful position of control. Our nation's labor relations history is certainly not stellar. If workers bitch too much, they send the jobs elsewhere. Sad that we can't truly take care of our own (Bruce Springsteen song comes to mind) instead of being forced to do so. I love teaching, but (you can guess where this is going) will probably leave in a year or so. I get great reviews and evaluations, but my paycheck communicates something different. Love your excellent points, Anne. Thanks for making them.

  6. You all make good points, but I have a question. What about freeway flyers? Which employer will be on the hook for their insurance? And will they suddenly be paying 9.5% premiums to multiple schools? And how will the IRS ever understand that?

    In my dealings with the IRS (a few years ago, ironically, an employee at my health insurance company stole SS# and sold them a group which filed fraudulent taxes in our names), they are so rule-bound that they simply cannot conceive of, nor work with, people who don't fall into neat categories. My concern here is that while I may be eligible for insurance, won't make any sense to someone not immersed in how adjuncts (never mind full time faculty) get paid.

    1. I'm glad you brought up fliers. That situation adds a factor that would yet again complicate matters (as it does so many others. For those working just at publics, qualifying as state employees could/should (but probably won't) facilitate totting up and recording wages from more than one institution.

      Are there any eastern states that do this? Then there is the California complication ~ community colleges being part of "K-14" school districts.

      How do TCREF and other portables calculate income from multiple sources?

  7. The way most interpretations of the Act seem, there is no mandate for part time employees in any facility to be given health care coverage. In fact I understand Walmart , who now partially covers part time employees, will not cover new part time employees after the law goes into effect due to the the costs.
    Maybe I have missed something in the Act but I do not think it has any affect on adjuncts.The only benefit we may see is that there may be some new, less expensive policies being offered in some states. In fact we are already looking into this for our Adjunct Local of 3700 members. Adjuncts in NJ do not have any employeer provided health care now, and I understand this will nto change in 2014.


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