The holiday season, summer rush, and other busy periods often mean hiring extra help. Seasonal and part-time employees can give your business the flexibility it needs, but they can also raise questions about health insurance eligibility and Affordable Care Act (ACA) requirements.
Before hiring temporary workers, it is worth understanding how your health plan handles these employees, and how adding more people to your payroll could affect your responsibilities as an employer.
Know How Your Waiting Period Lines Up with Your Hiring Timeline
Not every employee is automatically eligible for your company's health insurance. Your plan may have requirements based on hours worked, employment classification, or a waiting period before coverage begins.
Before seasonal hiring starts, review your health plan documents and make sure you know which employees are eligible. Pay particular attention to how your plan defines full-time, part-time, temporary, and seasonal employees.
Tell Seasonal Hires Exactly Where They Stand
Be clear with temporary workers about their benefits right from the start. Let them know whether they’re eligible for coverage, when it would begin, and when it would end. This helps employees understand their options and plan for any other coverage they may need.
Don't Overlook Your Part-Time Employees
The requirements for part-time employees can be especially confusing because there are two separate questions employers need to consider:
Do I have to offer this employee health insurance?
Does this employee count when determining the size of my business under the ACA?
Those answers aren't necessarily the same.
For purposes of the ACA’s employer shared responsibility rules, an employee generally is considered full-time if they average at least 30 hours of service per week or 130 hours in a month. Employers typically aren't required by the ACA employer mandate to offer coverage to employees who remain below the full-time threshold.
However, when determining whether the employer is large enough to be considered an Applicable Large Employer, the hours worked by part-time employees are combined to calculate
full-time equivalent employees (FTEs). That means that having several part-time employees could push a business closer to the ACA's 50-employee threshold, even though those individual employees aren't considered full-time.
What Is an Applicable Large Employer?
An
Applicable Large Employer, or ALE, is generally an employer that averaged at least
50 full-time employees, including full-time equivalents, during the previous calendar year.
Here's the important part: You don't simply count the number of people receiving health insurance. You count your full-time employees and then calculate the equivalent number represented by your part-time workforce. For example, as mentioned, multiple part-time employees' hours can add up to the equivalent of one or more full-time employees.
If your average reaches 50 or more, your business may be considered an ALE for the following year. ALEs have additional ACA responsibilities, including reporting requirements and requirements related to offering qualifying coverage to full-time employees and their dependents.
This is why businesses approaching 50 employees should pay particularly close attention when adding seasonal or part-time staff.
There's a Special Rule for Seasonal Workers
Fortunately, the ACA recognizes that some businesses temporarily exceed 50 employees because of a predictable seasonal rush. Under the ACA's
seasonal worker exception, an employer generally will not become an ALE solely because its workforce exceeds 50 full-time employees, including full-time equivalents, if:
- The workforce exceeds 50 for
120 days or fewer during the calendar year,
and
- The employees above the 50-employee threshold during that period are seasonal workers.
Holiday retail workers are one example of workers who may qualify as seasonal workers under this rule.
The terminology can get tricky because the ACA has separate definitions and rules involving "seasonal workers" and "seasonal employees." If your workforce regularly grows and shrinks during the year, it can be helpful for us to review your specific situation rather than assuming everyone hired temporarily will automatically fall under a seasonal exception.
What About Seasonal Employees Who Don't Qualify for Your Health Plan?
Even when seasonal or part-time employees aren't eligible for your group health plan, you can still help point them toward other coverage options.
Depending on their circumstances, employees may be able to explore:
- Individual health insurance, including coverage through the Health Insurance Marketplace
- Premium assistance, if they qualify based on household income and other eligibility requirements
- Medicaid or CHIP, depending on household income and state eligibility rules
- A spouse's or parent's employer plan, if they are eligible to enroll
- Short-term, limited-duration health insurance, where available, may provide temporary coverage for certain situations, but these plans can have significant coverage limitations.
The ACA Marketplace also offers Special Enrollment Periods (SEPs) for certain qualifying life events. For example, losing qualifying job-based health coverage may allow someone to enroll in a Marketplace plan outside the annual Open Enrollment Period. In some circumstances, seasonal workers who move to or from the place where they both live and work may also qualify for an SEP.
Rather than simply telling an employee, "You aren't eligible for our plan," employers can provide information about where they can turn for help. This increases trust and transparency in your workplace.
A Little Planning Can Prevent Surprises
Seasonal hiring shouldn't create an unexpected benefits problem. Before you add temporary or part-time employees, take a few minutes to review your plan's eligibility rules, understand how additional employees could affect your ACA employee count, and decide how you'll communicate coverage information to your new team members.
We can help. Whether you need to review your current group benefits, understand how your growing workforce may affect your ACA responsibilities, or provide coverage guidance for seasonal and part-time employees who aren't eligible for your company plan, we're here to help you find the right approach for your business and your employees.
