39–006 

113TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 113–386 

SAVE AMERICAN WORKERS ACT OF 2014 

MARCH 26, 2014.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. CAMP, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 2575] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 2575) to amend the Internal Revenue Code of 1986 to repeal the 30-hour threshold for classification as a full-time employee 

for purposes of the employer mandate in the Patient Protection and 

Affordable Care Act and replace it with 40 hours, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

CONTENTS 

Page 

I. Summary and Background ........................................................................... 2 

A. Purpose and Summary ..................................................................... 2 

B. Background and Need for Legislation ............................................. 2 

C. Legislative History ............................................................................ 3 

II. Explanation of the Bill .................................................................................. 4 

A. Repeal of 30 Hour Threshold for Classification as Full Time 

Employee for Purposes of the Employer Mandate in the Patient Protection and Affordable Care Act and Replacement 

with 40 Hours ................................................................................. 4 

III. Votes of the Committee ................................................................................. 7 

IV. Budget Effects of the Bill .............................................................................. 8 

A. Committee Estimate of Budgetary Effects ...................................... 8 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority .................................................................. 10 

C. Cost Estimate Prepared by the Congressional Budget Office ....... 10 


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D. Macroeconomic Impact Analysis ...................................................... 18 

V. Other Matters To Be Discussed Under the Rules of the House ................ 20 

A. Committee Oversight Findings and Recommendations ................. 20 

B. Statement of General Performance Goals and Objectives ............. 21 

C. Information Relating to Unfunded Mandates ................................ 21 

D. Applicability of House Rule XXI 5(b) .............................................. 21 

E. Tax Complexity Analysis .................................................................. 21 

F. Congressional Earmarks, Limited Tax Benefits, and Limited 

Tariff Benefits ................................................................................. 21 

G. Duplication of Federal Programs ..................................................... 22 

H. Disclosure of Directed Rule Makings .............................................. 22 

VI. Changes in Existing Law Made by the Bill, as Reported ........................... 22 

VII. Dissenting Views ........................................................................................... 24 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Save American Workers Act of 2014’’. 

SEC. 2. REPEAL OF 30-HOUR THRESHOLD FOR CLASSIFICATION AS FULL-TIME EMPLOYEE 

FOR PURPOSES OF THE EMPLOYER MANDATE IN THE PATIENT PROTECTION AND 

AFFORDABLE CARE ACT AND REPLACEMENT WITH 40 HOURS. 

(a) FULL-TIME EQUIVALENTS.—Paragraph (2) of section 4980H(c) of the Internal 

Revenue Code of 1986 is amended— 

(1) by repealing subparagraph (E), and 

(2) by inserting after subparagraph (D) the following new subparagraph: 

‘‘(E) FULL-TIME EQUIVALENTS TREATED AS FULL-TIME EMPLOYEES.—Solely 

for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number 

of full-time employees for any month otherwise determined, include for such 

month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 174.’’. 

(b) FULL-TIME EMPLOYEES.—Paragraph (4) of section 4980H(c) of the Internal 

Revenue Code of 1986 is amended— 

(1) by repealing subparagraph (A), and 

(2) by inserting before subparagraph (B) the following new subparagraph: 

‘‘(A) IN GENERAL.—The term ‘full-time employee’ means, with respect to 

any month, an employee who is employed on average at least 40 hours of 

service per week.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to 

months beginning after December 31, 2013. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

H.R. 2575 would, for purposes of the employer mandate established under the Patient Protection and Affordable Care Act 

(‘‘PPACA’’), repeal the 30-hours-per-week definition of full-time employee and the 120-hours-per-month definition of full-time equivalents, replacing those respective thresholds with 40-hours-per-week 

for full-time employees and 174-hours-per-month for full-time 

equivalents. 

B. BACKGROUND AND NEED FOR LEGISLATION

The majority of employers that voluntarily provide health coverage for their employees do so for their full-time employees, and 

most adopt 40 hours a week as the standard definition for full 

time, consistent with Federal overtime rules. This system successfully provides coverage for nearly 160 million Americans—by far 

the largest source of health coverage in America. 


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Employers and employees have adapted to a system where 

health benefits are voluntarily offered to full-time employees and 

rarely offered to part-time employees. According to research from 

the payroll benefits firm ADP, for large firms, 88% of full-time employees are eligible for benefits, while only 15 percent of part-time 

workers are offered health insurance. Since health benefits are a 

component of total compensation, providing coverage for part-time 

workers is cost-prohibitive for employers, and part-time employees 

tend to value cash compensation over health benefits. 

The employer mandate and the 30-hour rule within section 

4980H of the Internal Revenue Code of 1986, as established under 

PPACA, disrupt this successful system. The 30-hour rule, in particular, forces employers who have been providing coverage—in 

some cases for decades—to alter their benefit plans, drop coverage, 

or shift more of their workforce to part time to mitigate the effects 

of the mandated cost increases. 

Industries that employ lower-skill workers, and often provide 

entry-level opportunities for younger workers, are disproportionately affected by the 30-hour rule. Recent Hoover Institution research concluded: 

• The 30–hour rule puts 2.6 million workers with a median 

income of under $30,000 at risk for losing jobs or hours; 

• 89 percent of workers affected by the rule do not have college degrees; and 

• 63 percent are women, and over half have a high school diploma or less. 

There are widespread reports of employers reducing the number 

of hours for their workforces to below 30 hours to avoid, or at least 

mitigate, the penalty taxes associated with the employer mandate. 

Additionally, school districts, community colleges, and universities 

have reduced work hours for students, adjunct professors, and support staff. 

On July 2, 2013, the Obama Administration delayed enforcement 

of the employer mandate, and therefore the 30-hour rule, until 

2015. Despite the delay, employers have already begun to respond 

to the mandate. According to the U.S. Chamber of Commerce survey of small business executives, 71 percent of small businesses believe the health care law makes it harder to hire. Additionally, onehalf of small businesses report that they will either cut hours to 

reduce full-time employees, or replace full-time employees with 

part-timers to avoid the employer mandate. 

C. LEGISLATIVE HISTORY

BACKGROUND

H.R. 2575 was introduced on June 28, 2013, and was referred to 

the Committee on Ways and Means. 

COMMITTEE ACTION

The Committee on Ways and Means marked up H.R. 2575, the 

Save American Workers Act of 2014, on February 4, 2014, and ordered the bill, as amended, favorably reported (with a quorum 

being present). 


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1Pub. L. No 111–148, enacted March 23, 2010. 

2Pub. L. No. 111–152, enacted March 30, 2010. 

3Sec. 4980H, added to the Code by section 1513 of PPACA and amended by 10106 of PPACA 

and section 1003 of the Health Care and Education Reconciliation Act of 2010. (Unless otherwise 

stated, all section references herein are to the Internal Revenue Code of 1986, as amended.) An 

applicable large employer is also subject to annual reporting requirements under section 6056. 

Premium assistance credits for health insurance purchased on an American Health Benefit Exchange are provided under section 36B. Reduced cost-sharing for an individual’s share of expenses covered by such health insurance is provided under section 1402 of PPACA. For further 

information on these provisions, see Part III.B-D of Joint Committee on Taxation, Present Law 

and Background Relating to the Tax-Related Provisions in the Affordable Care Act (JCX–6–13), 

March 4, 2013, available on the Joint Committee of Taxation website at www.jct.gov. 4 Notice 2013–45, 2013–31 I.R.B. 116, Part III, Q&A–2. 

COMMITTEE HEARINGS

The problems associated with the employer mandate were discussed at four hearings during the 113th Congress: • Oversight Subcommittee hearing on the Tax-Related Provisions in the President’s Health Care Law (March 5, 2013); • Health Subcommittee hearing on the Delay of the Employer Mandate (July 10, 2013); • Health Subcommittee hearing on the Delay of the Employer Mandate Penalties and Reporting Requirements (July 

17, 2013); and • Full Committee hearing on the Impact of the Employer 

Mandate’s Definition of Full-time Employee on Jobs and Opportunities (January 28, 2014). 

II. EXPLANATION OF THE BILL 

A. REPEAL OF 30-HOUR THRESHOLD FOR CLASSIFICATION AS FULL- TIME EMPLOYEE FOR PURPOSES OF THE EMPLOYER MANDATE IN

THE PATIENT PROTECTION AND AFFORDABLE CARE ACT AND REPLACEMENT WITH 40 HOURS

PRESENT LAW

In general 

Under PPACA,1 as amended by the Health Care and Education 

Reconciliation Act of 2010 2 (generally referred to collectively as the 

‘‘Affordable Care Act’’ or ‘‘ACA’’), an applicable large employer may 

be subject to a tax, called an ‘‘assessable payment,’’ for a month if 

one or more of its full time employees is certified to the employer 

as receiving for the month a premium assistance credit for health 

insurance purchased on an American Health Benefit Exchange or 

reduced cost-sharing for the employee’s share of expenses covered 

by such health insurance.3 (This is sometimes referred to as the 

employer shared responsibility requirement.) As discussed below, 

the amount of the assessable payment depends on whether the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under a group 

health plan sponsored by the employer and, if it does, whether the 

coverage offered is affordable and provides minimum value. 

Under the ACA, these rules are effective for months beginning 

after December 31, 2013. However, the Internal Revenue Service 

(‘‘IRS’’) has announced that no assessable payments will be assessed for 2014.4 On February 10, 2014, the Department of the 

Treasury and the IRS issued final regulations on the employer 

shared responsibility requirement and announced that no assessVerDate Mar 15 2010 07:04 Mar 27, 2014 Jkt 039006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR386.XXX HR386

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5Section XV.D.6 of the preamble to the final regulations, 79 Fed. Reg. 8544, 8574-8575, February 12, 2014. 6 Additional rules apply, for example, in the case of an employer that was not in existence 

for the entire preceding calendar year. 7The rules for determining controlled group, group under common control, and affiliated service group under section 414(b), (c), (m) and (o) apply for this purpose. 8 In addition, in determining assessable payments (as discussed herein), only one 30-employee 

reduction in full-time employees applies to the group and is allocated among the members ratably based on the number of full-time employees employed by each member. 9For calendar years after 2014, the $2,000 dollar amount, and the $3,000 dollar amount referenced herein, are increased by the percentage (if any) by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year (as 

estimated by the Secretary of Health and Human Services (‘‘HHS’’) no later than October 1 of 

the preceding calendar year) exceeds the average per capita premium for 2013 (as determined 

by the Secretary of HHS), rounded down to the next lowest multiple of $10. 

able payments for 2015 will apply to applicable large employers 

that have fewer than 100 full-time employees and full time equivalent employees and meet certain other requirements.5

Definitions of full-time employee and applicable large employer 

For purposes of applying these rules, full-time employee means, 

with respect to any month, an employee who is employed on average at least 30 hours of service per week. Hours of service are to 

be determined under regulations, rules, and guidance prescribed by 

the Secretary of the Treasury, in consultation with the Secretary 

of Labor, including rules for employees who are not compensated 

on an hourly basis. 

Applicable large employer generally means, with respect to a calendar year, an employer who employed an average of at least 50 

full-time employees on business days during the preceding calendar 

year.6 Solely for purposes of determining whether an employer is 

an applicable large employer (that is, whether the employer has at 

least 50 full-time employees), besides the number of full-time employees, the employer must include the number of its full-time 

equivalent employees for a month, determined by dividing the aggregate number of hours of service of employees who are not fulltime employees for the month by 120. In addition, in determining 

whether an employer is an applicable large employer, members of 

the same controlled group, group under common control, and affiliated service group are treated as a single employer.7 If the group 

is an applicable large employer under this test, each member of the 

group is an applicable large employer even if any member by itself 

would not be an applicable large employer.8

Assessable payments 

If an applicable large employer does not offer its full-time employees and their dependents minimum essential coverage under 

an employer-sponsored plan and at least one full-time employee is 

so certified to the employer, the employer may be subject to an assessable payment of $2,000 9 (divided by 12 and applied on a 

monthly basis) multiplied by the number of its full-time employees 

minus 30, regardless of the number of full time employees so certified. For example, in 2016, Employer A fails to offer minimum essential coverage and has 100 full-time employees, 10 of whom receive premium assistance credits for the entire year. The employer’s assessable payment is $2,000 for each employee over the 30- 

employee threshold, for a total of $140,000 ($2,000 multiplied by 

70, that is, 100–30). 


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10 Under section 36B(c)(2)(C), coverage under an employer-sponsored plan is unaffordable if 

the employee’s share of the premium for self-only coverage exceeds 9.5 percent of household income, and the coverage fails to provide minimum value if the plan’s share of total allowed cost 

of provided benefits is less than 60 percent of such costs. 11 REG–138006–12, 78 Fed. Reg. 218, January 2, 2013. The IRS issued an advance notice of 

the proposed regulations on December 28, 2012. As noted above, the IRS subsequently announced that no assessable payments will be assessed for 2014. 12Treas. Reg. secs. 54.4980H–1(a)(21), (a)(22) and (a)(24), 54.4980H–2(c), and 54.4980H–3. 

Generally an employee who is offered minimum essential coverage under an employer-sponsored plan is not eligible for a premium assistance credit or reduced cost-sharing unless the coverage 

is unaffordable or fails to provide minimum value.10 However, if an 

employer offers its full-time employees and their dependents minimum essential coverage under an employer sponsored plan and at 

least one full-time employee is certified as receiving a premium assistance credit or reduced cost-sharing (because the coverage is 

unaffordable or fails to provide minimum value), the employer may 

be subject to an assessable payment of $3,000 (divided by 12 and 

applied on a monthly basis) multiplied by the number of such fulltime employees. However, the assessable payment in this case is 

capped at the amount that would apply if the employer failed to 

offer its full-time employees and their dependents minimum essential coverage. For example, in 2016, Employer B offers minimum 

essential coverage and has 100 full-time employees, 20 of whom receive premium assistance credits for the entire year. The employer’s assessable payment before consideration of the cap is $3,000 

for each full-time employee receiving a credit, for a total of $60,000. 

The cap on the assessable payment is the amount that would have 

applied if the employer failed to offer coverage, or $140,000 ($2,000 

multiplied by 70, that is, 100–30). In this example, the cap therefore does not affect the amount of the assessable payment, which 

remains at $60,000. 

Proposed and final regulations 

The IRS issued proposed regulations on the employer shared responsibility requirement on December 28, 2012.11 The preamble to 

the proposed regulations invited the public to provide comments on 

issues relating to the application of the employer shared responsibility requirement. As of February 4, 2014—the date on which the 

Ways and Means Committee marked up and ordered reported H.R. 

2575, as amended—final regulations had not yet been issued. 

As noted above, final regulations were issued on February 10, 

2014. The regulations define full-time employee (based on an average of at least 30 hours of service a week), full-time equivalent employee (based on 120 hours of service a month) and hours of service, as well as providing rules for determining an employer’s fulltime employees and full-time equivalent employees, effective for periods after December 31, 2014.12

REASONS FOR CHANGE

The Committee notes that for decades the standard work week 

in the United States has been 40 hours. The Committee believes 

that, by imposing a financial burden on employers with respect to 

employees who work less than the standard 40-hour work week, 

the Affordable Care Act creates incentives to reduce the paid hours 

of part-time employees or to dismiss these employees. Either outVerDate Mar 15 2010 07:04 Mar 27, 2014 Jkt 039006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR386.XXX HR386

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come is detrimental to the employees and the economy. The Committee believes the appropriate measure of full-time employee status is the longstanding standard of 40 hours per week. 

EXPLANATION OF PROVISION

Under the provision, full-time employee means, with respect to 

any month, an employee who is employed on average at least 40 

hours of service per week (rather than 30 hours as under present 

law). In addition, the number of full-time equivalent employees for 

a month is determined by dividing the aggregate number of hours 

of service of employees who are not full-time employees for the 

month by 174 (rather than 120 as under present law). 

EFFECTIVE DATE

The provision is effective for months beginning after December 

31, 2013. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 2575, the ‘‘Save American Workers Act of 2014.’’ 

The bill, H.R. 2575, was ordered favorably reported as amended 

by a roll call vote of 23 yeas to 14 nays (with a quorum being 

present). The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Camp .............................. X ........... ............. Mr. Levin .............................. ........... X .............

Mr. Johnson ........................... X ........... ............. Mr. Rangel ........................... ........... X .............

Mr. Brady .............................. X ........... ............. Mr. McDermott ..................... ........... X .............

Mr. Ryan ............................... X ........... ............. Mr. Lewis .............................. ........... X .............

Mr. Nunes ............................. X ........... ............. Mr. Neal ............................... ........... X .............

Mr. Tiberi .............................. X ........... ............. Mr. Becerra .......................... ........... ........... .............

Mr. Reichert .......................... X ........... ............. Mr. Doggett .......................... ........... X .............

Mr. Boustany ......................... X ........... ............. Mr. Thompson ...................... ........... X .............

Mr. Roskam ........................... X ........... ............. Mr. Larson ............................ ........... X .............

Mr. Gerlach ........................... X ........... ............. Mr. Blumenauer ................... ........... X .............

Mr. Price ............................... X ........... ............. Mr. Kind ............................... ........... X .............

Mr. Buchanan ....................... X ........... ............. Mr. Pascrell .......................... ........... X .............

Mr. Smith .............................. X ........... ............. Mr. Crowley .......................... ........... X .............

Mr. Schock ............................ X ........... ............. Ms. Schwartz ........................ ........... ........... .............

Ms. Jenkins ........................... X ........... ............. Mr. Davis .............................. ........... X .............

Mr. Paulsen ........................... X ........... ............. Ms. Sanchez ......................... ........... X .............

Mr. Marchant ........................ X 

Mrs. Black ............................. X 

Mr. Reed ............................... X 

Mr. Young ............................. X 

Mr. Kelly ................................ X 

Mr. Griffin ............................. X 

Mr. Renacci ........................... X 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 2575, as reported. 


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The bill, as reported, is estimated to have the following effects 

on Federal budget receipts for 2014–2024: 


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Provision 

Repeal the 30-Hours-Per-Week Definition of Full-Time 

Employee and the 120-Hours-Per-Month Definition of 

Full-lime Equivalents, Replacing those Respective 

Thresholds with 40-Hours-Per-Week for 

Employees and 174-Hours-Per-Month for Full-lime 

ESTIMATED BUDGET EFFECfS Qt' H.R. 2575, 

THE "SAVE AMERICAN WORKERS ACT OF 2014," 

AS REPORTED BY111E COMMITTEE ON WAYS AND MEANS 

Fiscal Years 2014 2024 

[Billions of Dollars] 

Effective 2014 2015 2016 2017 2018 2019 2020 2021 

Equivalents 11112]13].................................................. mba 12/31113 14] -4.5 -6.1 -7.0 -7.9 -8.1 -8.6 

N01E: Details may not add to totals due to rounding. 

Legend for "Effecthe" column: mba = months beginning after 

2022 2023 2024 2014-19 

-9.2 -10.8 -11.6 -25.4 

[1] Estimate produced jointly with the Congressional Budget Office. Estimate includes effects of reduction in emp10yer responsibility payments, aJong with associated changes in indirect revenues, 

individual mandate penalty taxes, exchange subsidies, and Medicaid and CHIP payments. 

[21 Estimate includes the following effects on 

[3] Estimate includes the following cbaoge in off-hodget [4] Loss ofte .. than $50 million. 

2014 2014 

2015 

0.3 

2015 

0.1 

2016 2017 

Ll 1.8 

2016 2017 

0.8 1.0 

2018 

2.1 

2018 

0.9 

2019 2020 

2.1 2.3 

2019 2020 

1.0 L3 

2021 

2.7 

2021 

L3 

2022 

2.8 

2022 

1.4 

2023 

2.9 

2023 

0.9 

2024 2014-19 

2.9 7.4 

2024 2014-19 

0.6 3.
10 

1The Affordable Care Act comprises the Patient Protection and Affordable Care Act (Public 

Law 111–148), the health care provisions of the Health Care and Education Reconciliation Act 

of 2010 (P.L. 111–152), and the effects of subsequent judicial decisions, statutory changes, and 

administrative actions. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee states 

further that the bill involves no new or increased tax expenditures. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, February 25, 2014. 

Hon. DAVE CAMP, Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2575, the Save American 

Workers Act of 2013. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Jean Hearne and 

Sarah Masi. 

Sincerely, 

ROBERT A. SUNSHINE

(For Douglas W. Elmendorf, Director). 

Enclosure. 

H.R. 2575—Save American Workers Act of 2013 

Summary: H.R. 2575 would alter the calculation of the number 

of full-time equivalent employees for the purposes of determining 

which employers are subject to penalties under the Affordable Care 

Act (ACA) for not offering health insurance for their employees or 

for offering insurance that does not meet certain criteria specified 

in the law.1 In addition, the legislation would change the definition 

of ‘‘full-time employee’’ used for the calculation of those penalties. 

Specifically, the bill would raise the threshold that defines full-time 

employment from 30 hours per week under current law to 40 hours 

per week. 

Those changes to the employer responsibility requirements of the 

ACA would reduce the number of employers assessed penalties and 

lower the penalties assessed against employers that do not offer insurance (or offer insurance that does not meet certain criteria) and 

that have at least one full-time employee receiving a subsidy 

through a health insurance exchange. As a result, the largest budgetary effect of H.R. 2575 would be to reduce the amount of penalties collected from employers. 


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As a result of those changes in who would pay penalties and 

what amounts they would have to pay, CBO and the staff of the 

Joint Committee on Taxation (JCT) estimate that enacting H.R. 

2575 would change the sources of health insurance coverage for 

some people. Specifically, in most years over the 2015–2024 period, 

CBO and JCT estimate that the legislation would: • Reduce the number of people receiving employment-based 

coverage—by about 1 million people; • Increase the number of people obtaining coverage through 

Medicaid, the Children’s Health Insurance Program (CHIP), or 

health insurance exchanges—by between 500,000 and 1 million 

people; and • Increase the number of uninsured—by less than 500,000 

people. 

As a consequence of the changes in penalties and in people’s 

sources of insurance coverage, CBO and JCT estimate that enacting H.R. 2575 would increase budget deficits by $25.4 billion over 

the 2015–2019 period and by $73.7 billion over the 2015–2024 period. The 2015–2024 total is the net of an increase of $83.0 billion 

in on-budget costs and $9.3 billion in off-budget savings (the latter 

attributable to increased revenues). Pay-as-you-go procedures apply 

because enacting the legislation would affect direct spending and 

revenues. 

JCT has determined that H.R. 2575 contains no intergovernmental or private-sector mandates as defined in the Unfunded 

Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2575 is shown in the following table. The costs 

of this legislation fall within budget function 550 (health). 


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By fiscal year, in billions of dollars— 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014–2019 2014–2024 

CHANGES IN DIRECT SPENDING 

Exchange Subsidies: 

Estimated Budget Authority ..................... 0 0.1 0.8 1.4 1.7 1.7 1.9 2.2 2.3 2.3 2.3 5.8 16.8 Estimated Outlays .................................... 0 0.1 0.8 1.4 1.7 1.7 1.9 2.2 2.3 2.3 2.3 5.8 16.8 

Medicaid and CHIP: 

Estimated Budget Authority ..................... 0 0.2 0.4 0.7 0.5 0.5 0.6 0.6 0.6 0.7 0.7 2.4 5.5 Estimated Outlays .................................... 0 0.2 0.4 0.7 0.5 0.5 0.6 0.6 0.6 0.7 0.7 2.4 5.5 

Other: 

Estimated Budget Authority ..................... 0 * ¥0.2 ¥0.2 ¥0.2 ¥0.1 ¥0.2 ¥0.2 ¥0.2 ¥0.1 ¥0.1 ¥0.8 ¥1.4 

Estimated Outlays .................................... 0 * ¥0.2 ¥0.2 ¥0.2 ¥0.1 ¥0.2 ¥0.2 ¥0.2 ¥0.1 ¥0.1 ¥0.8 ¥1.4 

Total Changes in Direct Spending: 

Estimated Budget Authority ..................... 0 0.3 1.1 1.8 2.1 2.1 2.3 2.7 2.8 2.9 2.9 7.4 20.9 Estimated Outlays .................................... 0 0.3 1.1 1.8 2.1 2.1 2.3 2.7 2.8 2.9 2.9 7.4 20.9 

CHANGES IN REVENUES 

Estimated Revenues: 0 0.2 ¥3.4 ¥4.3 ¥4.9 ¥5.7 ¥5.8 ¥6.0 ¥6.4 ¥7.9 ¥8.7 ¥18.0 ¥52.8 

On-Budget ................................................ 0 0.1 ¥4.2 ¥5.2 ¥5.8 ¥6.7 ¥7.1 ¥7.3 ¥7.8 ¥8.8 ¥9.3 ¥21.9 ¥62.1 

Off-Budget a .............................................. 0 0.1 0.8 1.0 0.9 1.0 1.3 1.3 1.4 0.9 0.6 3.8 9.3 

NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES 

Change in the Deficit ........................................ 0 * 4.5 6.1 7.0 7.8 8.1 8.6 9.2 10.8 11.6 25.4 73.7 

On-Budget ................................................ 0 0.1 5.3 7.1 7.9 8.8 9.3 9.9 10.6 11.7 12.2 29.3 83.0 Off-Budget a .............................................. 0 ¥0.1 ¥0.8 ¥1.0 ¥0.9 ¥1.0 ¥1.3 ¥1.3 ¥1.4 ¥0.9 ¥0.6 ¥3.8 ¥9.3 

Notes: Numbers may not sum to totals because of rounding. 

CHIP = Children’s Health Insurance Program; * = savings or costs of less than $50 million. a. All off-budget effects would come from changes in revenues. (The payroll taxes for Social Security are classified as ‘‘off-budget.’’) 


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2 Under the ACA, coverage is considered affordable if the employee would be required to pay 

no more than a specified share of his or her income (9.5 percent in 2014) for self-only coverage. 

In addition, the plan offered must pay at least 60 percent of the costs of covered benefits. 3 In 2015, a large employer must offer health insurance coverage to at least 70 percent of its 

full-time employees. (That percentage requirement grows to 95 percent in 2016 and later years.) 

In general, the first 30 full-time employees will be excluded from the penalty calculation for failing to provide health insurance coverage to a certain percentage of full-time employees. However, in 2015, for employers with at least 100 FTEs, the first 80 full-time employees will be excluded from the penalty calculation. 

Basis of estimate: Under current law, beginning in 2015, certain 

large employers who do not offer health insurance coverage that 

meets the affordability and minimum-value standards defined in 

the ACA will have to pay a penalty to the federal government if 

they have full-time employees who receive a subsidy through a 

health insurance exchange.2 Employers with at least 50 full-time 

equivalent employees (FTEs) will be subject to that employer responsibility requirement. In 2015, however, those employers with 

at least 50 but less than 100 FTEs will be exempt from the requirement if they certify that they did not make certain reductions to 

health insurance coverage or to the number of FTE employees. 

For the purpose of determining which employers are subject to 

the penalty under the ACA, the number of FTEs for a given month 

is calculated by adding the number of full-time employees (defined 

as those who work at least 30 hours per week) to the number of 

hours of service for part-time employees in that month divided by 

120. (That figure represents an average of 30 hours a week for four 

weeks.) 

Penalties for affected employers will be a set dollar amount times 

a certain number of their full-time employees. The penalty will be 

calculated slightly differently depending on whether the employer 

does not offer health insurance at all or does not offer health insurance that meets the standards established by the ACA, as follows: • If a large employer does not offer health insurance coverage to 

a certain minimum percentage of its full-time employees, and if at 

least one of those full-time employees receives a subsidy through 

a health insurance exchange, the penalty will be based on the number of employees who work at least 30 hours per week, with some 

adjustments.3

• If a large employer offers health insurance coverage to at least 

the minimum percentage of full-time workers and one or more fulltime workers receive a subsidy through a health insurance exchange, or if the coverage offered does not meet either the affordability or minimum-value standard defined in the ACA, the penalty 

will be based on the number of employees who work at least 30 

hours per week that receive a subsidy through a health insurance 

exchange (up to a maximum). 

H.R. 2575 would make two changes to the calculation of FTEs for 

the purpose of determining which employers are subject to the employer responsibility requirement for a given month. First, the 

number of full-time employees would be defined as those who work 

at least 40 hours per week instead of those who work at least 30 

hours per week. Second, that number would be added to the number of hours of service for part-time employees, defined as those 

working less than 40 hours per week, divided by 174 instead of 

120. (That figure of 174 is roughly equal to 40 hours per week for 

52 weeks, prorated to produce a monthly average.) For many employers, those changes to the FTE calculation would reduce the 


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4See Congressional Budget Office, CBO and JCT’s Estimates of the Effects of the Affordable 

Care Act on the Number of People Obtaining Employment-Based Health Insurance (March 

2012), http://www.cbo.gov/publication/43082 

number of FTEs, thereby making fewer employers large enough to 

be subject to the employer responsibility requirement. 

In addition, H.R. 2575 would change the definition of full-time 

employees for purposes of calculating the employer’s penalty. 

Under current law, full-time employees for whom those penalties 

could potentially be assessed are defined as those who work at 

least 30 hours per week. Under H.R. 2575, penalties could be assessed only for those who work at least 40 hours per week. 

Effects on employers’ incentive to offer coverage 

The employer responsibility penalty under current law increases 

the cost of not offering employment-based coverage and thus increases the incentive for employers to offer employment-based coverage. In contrast, under H.R. 2575, some employers would no 

longer be subject to the employer responsibility requirement because of the change in the calculation of the number of FTEs. 

Other firms would still be subject to the employer responsibility requirement but would face lower penalty payments because fewer 

workers would be classified as full-time for purposes of the penalty 

calculation. As a result, CBO and JCT expect that more employers 

would choose to not offer coverage to their employees. 

Nevertheless, most of the affected employers would continue to 

offer coverage because most employers construct compensation 

packages to attract the best available workers at the lowest possible cost. That is, firms attempt to offer the mix of wages and 

nonwage benefits that will be most attractive to their current and 

potential employees while having the lowest cost. Most employers 

would continue to offer employment-based coverage to their employees under H.R. 2575 because their employees prefer such coverage over insurance policies offered through the individual market 

or exchanges.4

Under H.R. 2575, CBO and JCT expect that some employers 

would choose to reduce the number of employees who work 40 or 

more hours per week, in order to avoid or reduce the penalty. For 

example, without changing the total number of hours worked by its 

employees, an employer might reassign hours worked so that there 

are more employees just below the 40-hour threshold than there 

would otherwise be. 

Also, enacting H.R. 2575 would probably provide an incentive for 

some employers to redefine work hours so that more employees 

would be categorized as part-time. Some employers might seek to 

avoid or lower penalty payments by reducing the number of hours 

counted toward the full-time threshold without changing the actual 

number of hours worked or employees’ wages. For example, an employer could discontinue counting lunch hours or breaks as work 

time. (The ability of employers to make such adjustments depends 

on labor-related state laws, as well as limitations under the Fair 

Labor Standards Act.) 

Because many more workers work 40 hours per week (or slightly 

more) than work 30 hours per week (or slightly more), the changes 

made by H.R. 2575 could affect many more workers than are affected under current law. CBO and JCT expect this effect to be limVerDate Mar 15 2010 07:04 Mar 27, 2014 Jkt 039006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR386.XXX HR386

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ited, however, by employers’ incentives to attract the best workforce for their firm in making decisions about hours, wages, and 

benefits. Even without any statutory requirements, employers 

whose current workforce comprises mostly 40-hour workers tend to 

offer health coverage at a greater rate than employers whose employees typically work between 30 and 35 hours per week. All told, 

CBO and JCT expect that a small percentage of employers would 

either reassign or reduce hours of employees who work 40 hours 

per week or slightly more. 

Effects on insurance coverage 

Enacting H.R. 2575 would reduce the number of people enrolled 

in employment-based coverage and thus increase the number of 

people who would obtain health insurance from other sources or 

would be uninsured, CBO and JCT estimate. 

Specifically, if H.R. 2575 was enacted, CBO and JCT estimate 

that in most years between 2015 and 2024, insurance coverage 

would change in the following ways relative to CBO’s current baseline projections: • Roughly 1 million fewer people would enroll in employmentbased coverage. • Between 500,000 and 1 million more people would obtain coverage through an exchange, Medicaid, or CHIP. • Fewer than one-half million additional people would be uninsured. 

Effects on federal revenues and spending 

CBO and JCT estimate that H.R. 2575 would result in net budg- etary costs to the federal government of $73.7 billion over the 

2015–2024 period. (For purposes of this estimate, we assume that 

the bill will be enacted during 2014; we expect that there would be 

no effect on the budget during the remainder of fiscal year 2014 because the employer responsibility requirement will not take effect 

until 2015.) That projected increase in federal deficits consists of a 

$52.8 billion net reduction in revenues and a $20.9 billion net increase in direct spending over the 10-year period. Of the net revenue decrease, an estimated $62.1 billion would stem from a decrease in on-budget revenues, partially offset by an estimated $9.3 

billion increase in off-budget (Social Security) revenues. 

The reduction in revenues would result from smaller collections 

of penalty payments by employers. CBO and JCT estimate that 

those payments would be $63.4 billion lower over the next 10 years 

for two reasons, a reduction of more than 40 percent: Fewer employers would be subject to the employer responsibility provision 

and thus would be exempt from paying penalties; and some employers that would be assessed penalties under the bill would make 

smaller penalty payments because fewer employees would be included in the calculation for those employers’ penalty assessments. 

The reduction in revenues for penalty payments would be partially offset, CBO and JCT estimate, by a $12.4 billion increase in 

tax revenues over the 2015–2024 period because fewer people 

would be enrolled in employment-based coverage. That change 

would lead to a larger share of total compensation taking the form 

of taxable wages and salaries and a smaller share taking the form 

of non-taxable health benefits. (Other effects, including changes in 


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5Subsidies for health insurance premiums are structured as refundable tax credits; the portions of such credits that exceed taxpayers’ liabilities are classified as outlays, whereas the portions that reduce tax payments are reflected in the budget as reductions in revenues. 

the amount of exchange subsidies discussed below, would account 

for the remaining $1.8 billion net decrease in revenues.) 

CBO and JCT estimate that, over the 2015–2024 period, outlays would be higher (by $16.8 billion) and revenues would be lower (by 

$2.1 billion) under H.R. 2575 because more people would obtain 

premium and cost-sharing subsidies through insurance exchanges.5

That change would mostly reflect a movement away from employment-based insurance. 

In addition, CBO estimates that federal outlays for Medicaid and CHIP would be $5.5 billion higher over the 2015–2024 period because more people would enroll in those programs. Most of that additional enrollment would be by people who would otherwise have 

employment-based insurance under current law. Other, smaller effects would reduce outlays by $1.4 billion over the 10-year period. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. Only on-budget 

changes to outlays or revenues are subject to pay-as-you-go procedures. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2575, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON FEBRUARY 4, 2014 

By fiscal year, in millions of dollars— 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014–2019 2014–2024 

NET INCREASE OR DECREASE (¥) IN THE ON-BUDGET DEFICIT 

Statutory Pay-As-You-Go Impact ....................... 0 120 5,324 7,078 7,912 8,832 9,324 9,907 10,593 11,672 12,244 29,266 83,006 

Memorandum: 

Changes in Outlays .................................. 0 260 1,135 1,842 2,084 2,090 2,273 2,655 2,770 2,881 2,926 7,412 20,917 Changes in Revenues ............................... 0 141 ¥4,188 ¥5,236 ¥5,828 ¥6,742 ¥7,051 ¥7,253 ¥7,822 ¥8,791 ¥9,318 ¥21,854 ¥62,088 

Note: Numbers may not sum to totals because of rounding. 


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13 As discussed elsewhere in this report, final regulations granted transition relief for firms 

employing between 50 and 100 employees in 2015. 

Intergovernmental and private-sector impact: JCT has determined that H.R. 2575 contains no intergovernmental or private-sector mandates as defined by UMRA. 

Estimate prepared by: Sarah Masi, Jean Hearne, and staff of the 

Joint Committee on Taxation. 

Estimate approved by: Holly Harvey, Deputy Assistant Director 

for Budget Analysis. 

D. MACROECONOMIC IMPACT ANALYSIS

In compliance with clause 3(h)(2) of rule XIII of the Rules of the 

House of Representatives, the following statement is made by the 

Joint Committee on Taxation with respect to the provisions of H.R. 

2575: the effects of the bill on economic activity are so small as to 

be incalculable within the context of a model of the aggregate economy. 

Under present law, firms that employ more than 50 full-time 

equivalent employees are required either to provide qualifying affordable health coverage to their full-time employees or pay mandate penalties based on the number of full-time employees.13 The 

bill changes the calculation of ‘‘full-time equivalent employee’’ such 

that fewer firms cross this threshold to become subject to the requirement. It also changes the definition of ‘‘full-time employee’’ 

from an employee who works at least 30 hours per week to an employee who works at least 40 hours per week, thus reducing the 

number of employees to whom firms are required to provide health 

coverage. Both provisions of the bill, therefore, provide some firms 

relief from a specific form of employment cost required under 

present law. 

Under present law and under the bill, the amount employers are 

willing to pay in employment costs for their employees is determined by the amount they expect employees to generate in additional output. Compensation costs include wages, benefits (including health coverage), and associated employment taxes (including 

any mandate penalty). If a change in tax policy changes the relative costs of these components of compensation, it is expected that 

their relative shares would be adjusted to minimize after-tax costs 

to employers while maximizing after-tax compensation for employees. Thus, one behavioral response to the health coverage mandate 

is that employers may reduce cash wages or other benefits in order 

to hold their total compensation costs fixed. In this way, firms can 

avoid incurring increased costs of overall compensation. It is expected that the relaxation of the coverage mandate provided for in 

the bill will not affect overall employment costs for firms able to 

substitute between health benefits or the penalty and cash wages 

and other benefits. These types of adjustments are not expected to 

have an effect on overall economic growth, although they could 

have an effect on taxable income. The effects of these adjustments 

on taxable income are accounted for in the conventional revenue estimate. 

However, some employers may not be able to reduce cash wages 

and other benefits sufficiently to hold their employment costs fixed, 

either because their wage rates are at or near the minimum wage 


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14See, for example, John Tozzie, ‘‘Franchise Industry: We’re Already Cutting Hours Because 

of Obamacare,’’ BloombergBusinessweek, November 13, 2013, http://www.businessweek.com/articles/2013-11-13/franchise-industry-we-re-already-cutting-hours-because-of-obamacare; and testimonies of Lanhee J. Chen, Peter Anastos, Neil Trautwein, Thomas J. Snyder and Helen Levy 

at the Ways and Means Committee ‘‘Hearing on the Impact of the Employer Mandate’s Definition of Full-time Employee on Jobs and Opportunities,’’ January 28, 2014. 15 It is too soon for statistically testable data on the response of employers to the employer 

mandate to be available. There has been some statistical analysis of responses to state and local 

employer health insurance mandates. Thomas C. Buchmeiller, John DiNardo, and Robert 

Valleta find no overall reduction in hours or wages over a 25-year period in response to an employer health insurance mandate in Hawaii, but some trend toward substitution of part-time 

workers for full-time workers in ‘‘The Effect of Employer Health Insurance Mandate on Health 

Insurance Coverage and the Demand for Labor in Hawaii,’’ American Economic Journal: Economic Policy 3, 2011, pp. 25–51. Carrie H. Colla, William H. Dow, and Arindrajit Bue find no 

evidence of a change in employment or wages over a much shorter, 18 month time period in 

response to enactment of a health insurance mandate in San Francisco in ‘‘The Labor Market 

Impact of Employer Health Benefit Mandates: Evidence from San Francisco’s Health Care Security Ordinance,’’ NBER Working Paper No. 17198, July, 2011. 

or because they are subject to some other institutional restrictions 

on adjusting wages and benefits, such as civil service requirements 

or collective bargaining contracts. And some employers may calculate that their employees would be better off with a small reduction in hours than with a reduction in other forms of compensation. 

For these employers, the employer mandate penalty under present 

law may result in increased costs, and provide some incentive for 

firms to adjust employment practices to avoid the requirements. It 

is expected that where possible, firms would reallocate hours 

worked among employees to minimize the number of employees 

deemed to be ‘‘full-time.’’ There have been many survey and anecdotal accounts of employers taking or planning to take such action 

under current law.14 These accounts do not provide enough information for us to be able to quantify the extent to which the reduction in hours per employee would result in an overall reduction in 

hours, or a reallocation of hours among employees.15 Because the 

health insurance requirements are unlikely to affect demand for 

the services of the employer, if the employer can minimize its exposure to the requirements without changing its scope of operations, 

it is expected to do so, by reallocating hours among employees. 

Such adjustments are not expected to have an effect on overall economic growth, although they would affect the allocation of disposable income among individual employees. 

However, some employers may find that the adjustment costs associated with reallocating hours among employees sufficiently large 

that they prefer to reduce the total number of hours worked or reduce hiring to stay below the 50 full-time equivalent employee 

threshold. This could have an effect on overall economic activity, 

but it would be quite small relative to the overall size of the economy under present law, given the small number of employees working for employers subject to the mandate whose hours of work are 

near enough to the 30-hour threshold to make reducing hours 

worked to below 30 per person feasible. 

The change in the definition of full-time employee in the bill removes incentives for firms to reduce hours for workers below 30 

hours per week. But it would increase the feasibility of reducing 

hours enough to avoid the mandate for employers whose employees 

typically work 40-hour weeks. Roughly five times as many workers 

work 40 hours per week as work 30 to 34 hours per week; thus the 

incentive to re-allocate or reduce hours could potentially affect a 

larger share of the workforce under the bill than it does under 


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16 Bureau of Labor Statistics, ‘‘Labor Statistics from the Current Population Survey,’’ February 2013. Available at: http://www.bls.gov/cps/cpsaat19.htmhttp://www.bls.gov/cps/ 

cpsaat19.htm. 17One study notes that almost 80 percent of those in firms of 100 or more who work 37 hours 

or more per week are covered by employer insurance, while fewer than 50 percent of those who 

work between 30 and 36 hours per week have employer insurance. See UC Berkeley Labor Center, ‘‘Which Workers are Most at Risk of Reduced Work Hours under the Affordable Care Act,’’ 

February 2013. Available at: http://laborcenter.berkeley.edu/healthcare/reduced—work— 

hours13.pdf. According to an ADP study of large employers, 88 percent of firms offer health coverage to their full time workers, while only 15 percent of firms offer it to part-time workers. 

see: ADP Research Institute, ‘‘ADP’s 2012 Study of Large Employer Health Benefits Benchmarks for Companies with 1,000+ Employees,’’ pp.7–8. Available at: http://www.adp.com// 

media/RI/whitepapers/NAS%20Health%20Benefits-WhitePaper.ashx, at pp. 7–8. 

present law.16 Offsetting this asymmetry, however, is the fact that 

a much larger share of those who work 40 hours than those who 

work 30 hours already have offers of qualifying employer coverage 

even without the employer mandate penalty, and thus their employment costs would not be affected by the bill.17

The bill would eliminate possible reductions in economic activity 

related to 30-hour workers under present law. However, it could 

provide an additional incentive for employers whose employees 

work 40 hours per week to rearrange or reduce their hours to fall 

under the threshold. It is anticipated that under the bill, employers 

with 40-hour workforces would use the same strategies described 

for the 30-hour employers to minimize their exposure to costs imposed by the mandate penalty. Most of these strategies would not 

affect overall economic activity, but it is possible that some of the 

workers who lose their health insurance under the bill would reduce their work hours in order to qualify for exchange subsidies, 

thus offsetting gains from restored labor for those who work close 

to 30 hours. In addition, under the bill there might be some employers of 40-hour workers who would newly view compliance with 

the employer insurance requirements as a marginal decision, and 

for whom adjustment costs would be sufficient to cause an overall 

reduction in their hours worked and output thus also potentially 

offsetting gains in activity related to removing possible present-law 

incentives to reduce hours for 30-hour workers. 

While the bill is likely to change which employers reallocate or 

reduce hours worked for their employees, the net change in this 

practice relative to present law is expected to be quite small. The 

estimated tax savings for employers due to this bill, while important to individual employers, are quite small relative to overall employment costs in the economy. Thus, the effects of the bill on the 

economy are too small and uncertain to calculate within JCT macroeconomic models. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee advises that it was as a result of the Committee’s review of 

the provisions of H.R. 2575 that the Committee concluded that it 

is appropriate to report the bill, as amended, favorably to the 

House of Representatives with the recommendation that the bill do 

pass. 


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B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that ‘‘A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not 

be considered as passed or agreed to unless so determined by a 

vote of not less than three-fifths of the Members voting, a quorum 

being present.’’ The Committee has carefully reviewed the bill, and 

states that the bill does not involve any Federal income tax rate 

increases within the meaning of the rule. 

E. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Restructuring 

and Reform Act of 1998 (the ‘‘IRS Reform Act’’) requires the staff 

of the Joint Committee on Taxation (in consultation with the Internal Revenue Service and the Treasury Department) to provide a 

tax complexity analysis. The complexity analysis is required for all 

legislation reported by the Senate Committee on Finance, the 

House Committee on Ways and Means, or any committee of conference if the legislation includes a provision that directly or indirectly amends the Internal Revenue Code and has widespread applicability to individuals or small businesses. 

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House 

of Representatives, the staff of the Joint Committee on Taxation 

has determined that a complexity analysis is not required under 

section 4022(b) of the IRS Reform Act because the bill contains no 

provisions that amend the Code and that have ‘‘widespread applicability’’ to individuals or small businesses, within the meaning of 

the rule. 

F. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill, and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 


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G. DUPLICATION OF FEDERAL PROGRAMS

In compliance with Sec. 3(j)(2) of H. Res. 5 (113th Congress), the 

Committee states that no provision of the bill establishes or reauthorizes: (1) a program of the Federal Government known to be duplicative of another Federal program, (2) a program included in any 

report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or (3) a program related 

to a program identified in the most recent Catalog of Federal Domestic Assistance, published pursuant to the Federal Program Information Act (Public Law 95–220, as amended by Public Law 98– 

169). 

H. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(k) of H. Res. 5 (113th Congress), the 

following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle D—Miscellaneous Excise Taxes 

* * * * * * * 

CHAPTER 43—QUALIFIED PENSION, ETC., 

PLANS 

* * * * * * * 

SEC. 4980H. SHARED RESPONSIBILITY FOR EMPLOYERS REGARDING 

HEALTH COVERAGE. 

(a) * * * 

* * * * * * * 

(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— 

(1) * * * 

(2) APPLICABLE LARGE EMPLOYER.— (A) * * * 

* * * * * * * 

ø(E) FULL-TIME EQUIVALENTS TREATED AS FULL-TIME EMPLOYEES.—Solely for purposes of determining whether an 

employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of fulltime employees for any month otherwise determined, inVerDate Mar 15 2010 07:04 Mar 27, 2014 Jkt 039006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\HR386.XXX HR386

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clude for such month a number of full-time employees determined by dividing the aggregate number of hours of 

service of employees who are not full-time employees for 

the month by 120.¿ 

(E) FULL-TIME EQUIVALENTS TREATED AS FULL-TIME EM- PLOYEES.— Solely for purposes of determining whether an 

employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of fulltime employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of 

service of employees who are not full-time employees for the 

month by 174. 

* * * * * * * 

(4) FULL-TIME EMPLOYEE.— 

ø(A) IN GENERAL.—The term ‘‘full-time employee’’ means, 

with respect to any month, an employee who is employed 

on average at least 30 hours of service per week.¿ 

(A) IN GENERAL.—The term ‘‘full-time employee’’ means, 

with respect to any month, an employee who is employed on 

average at least 40 hours of service per week. 

* * * * * * * 


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DISSENTING VIEWS 

Because of the short notice, the Joint Committee on Taxation 

(JCT) and the Congressional Budget Office (CBO) were unable to 

provide the Committee with estimates on both cost and insurance 

coverage changes as a result of the bill. In fact, one reason the 

analysis is unavailable is because the effects of the legislation are 

so complicated. Given that this legislation could result in substantial compensation and coverage shifts for anyone who works between 30 and 40 hours a week, it will have significant budgetary 

effects, including both a loss of revenues and increased federal 

spending. Under the legislation, many employers would no longer 

be required to offer affordable coverage or pay a ‘‘free rider’’ penalty to help offset their employees’ health coverage in the Exchanges or Medicaid. 

No member should be asked to vote blindly on legislation with 

such potentially far-reaching implications. To that end, numerous 

important questions went unanswered during the Committee’s 

markup, and still remain unanswered, including, but not limited 

to, the following: 

1. How much will this bill cost taxpayers? 

2. How much will this bill increase federal spending? 

3. What is the estimate of lost revenue resulting from fewer employers being subject to employer responsibility penalties? 

4. How many Americans (workers and dependents) will lose their 

job-based health insurance coverage as a result of this bill? 

5. How many Americans will be forced to shift from employer 

coverage to Medicaid and the Exchanges as a result of this bill? 

6. How many Americans will remain or become uninsured as a 

result of this bill? 

7. How many Americans will have their hours cut or otherwise 

lose wages as a result of this bill? 

8. Which income groups are most affected by these changes? 

All of these questions are important to understand the cost and 

health insurance coverage effects of this legislation. The upshot is 

that it may well increase the federal deficit while simultaneously 

decreasing employer-sponsored insurance coverage. If that is so, it 

is two steps in the wrong direction. 

While JCT and CBO have been unable to offer estimates at this 

time, several non-partisan researchers have found that raising the 

threshold of full-time from 30 hours to 40 hours would place two 

to five times as many workers at risk of having their hours just 

slightly reduced in order to avoid employer responsibility requirements. The 30-hour threshold was designed to minimize gaming, 

since the overwhelming majority of businesses currently use a 

threshold higher than 30 hours and would have to substantially reduce hours to avoid their responsibility. The fact of the matter is 

that a business generally operates with either a part-time or fullVerDate Mar 15 2010 07:04 Mar 27, 2014 Jkt 039006 PO 00000 Frm 00024 Fmt 6604 Sfmt 6604 E:\HR\OC\HR386.XXX HR386

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time work force. There aren’t many employers who will re-tool their 

entire business practice and staffing model to avoid the 30-hour requirement, but there are those who already operate in a part-time 

workforce or are planning to do so for other reasons. The simple 

fact is that some employers want the law changes because it is difficult to avoid their responsibility under a 30-hour standard. This 

is not about protecting employee benefits, it is about protecting 

businesses. That’s why the legislation is opposed by Consumers 

Union, AFL-CIO, AFSCME, and the National Education Association. 

In fact, recent studies provide little evidence that the Affordable 

Care Act (ACA) has created an incentive to significantly shift toward part-time work. We fear moving to 40-hours would affect 

many more workers and invite serious gamesmanship as employers 

tweak work schedules to reduce hours and avoid their responsibility to offer coverage or contribute to the public cost of coverage 

for their workers. 

The bill is the latest in a continued series of attacks by the Majority on the ACA. Republicans continue to blame the ACA for business decisions that would occur even without reform. It is disingenuous for ACA opponents to claim workforce changes years in advance of the ACA employer responsibility provisions taking effect. 

Since 2010, we have heard claims of job loss, benefit cuts and other 

draconian steps to avoid taking responsibility for supporting or 

helping to fund employee health benefits. However, just this morning, the CBO reported that there is ‘‘no compelling evidence that 

part-time employment has increased as a result of the ACA.’’ The 

report also indicated that labor force changes predicted under the 

ACA are ‘‘almost entirely because workers will choose’’ to leave jobs 

they no longer want or need, now that they can obtain health benefits elsewhere. This frees up those who want to stay home to raise 

children, need to care for an ailing relative, or want to start a new 

business. As further proof that the ACA is not the ‘‘job killer’’ 

claimed by the Republican, the private sector has added 8.1 million 

jobs since the ACA was enacted in March, 2010. 

This bill reiterates the misplaced priorities of the Committee’s 

majority. This bill was brought before the Committee on Ways and 

Means despite the many pressing issues over which we have exclusive jurisdiction. Among other items, we are in imminent need of 

legislation to raise the debt ceiling. We have not considered legislation to help more than 1.6 million long-term uninsured Americans 

hurt by the expiration of emergency unemployment insurance. Instead of considering these key measures, H.R. 2575 has been 

rushed before the Committee without any firm information on its 

cost and coverage effects. Under this legislation, millions of Americans are at risk of losing their job-based health benefits or having 

their hours cut or both. It should be no surprise that the Democratic Members of the Committee on Ways and Means voted 

against H.R. 2575. 

In sum, while we stand ready to work across the aisle to perfect 

health reform and pursue technical corrections, we oppose efforts 


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26 

that would undermine its core tenets and lead to a loss in job-based 

benefits or wages for American workers and their families. 

Sincerely, 

SANDER LEVIN. CHARLES B. RANGEL. JIM MCDERMOTT. JOHN LEWIS. RICHARD E. NEAL. XAVIER BECERRA. LLOYD DOGGETT. MIKE THOMPSON. JOHN B. LARSON. 

EARL BLUMENAUER. 

RON KIND. 

BILL PASCRELL, JR. 

JOSEPH CROWLEY. 

ALLYSON Y. SCHWARTZ. 

DANNY K. DAVIS. LINDA T. SA ́ NCHEZ. 

Æ 


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