Determining When a Seasonal Employee Becomes Eligible For Health Care Coverage

Employers face a number of issues when it comes to seasonal workers. The most predominant issue is whether employers are required to provide them with health care coverage in relation to the mandates of the Affordable Care Act (ACA).

Last time we discussed how an organization determines if they fall into small or large employer status for 2015 based on its seasonal workforce for 2014 (view here).

The question for this week to consider as it relates to your organization is:

If seasonal employees work full time for a few weeks or months during the busy season must an Applicable Large Employer (ALE) offer health care coverage to them?

An employer must offer health care coverage to all full-time employees and their children beginning in 2015 if they are a “large” employer and in 2016 if they are a “small” employer. This is determined after seasonal workers who worked less than 120 days are excluded.

A “large” employer that is subject to the employer mandate can adopt a measurement period to measure the seasonal employee’s full-time status.  For example, instead of a policy that measures the full-time status of seasonal employees over a period of one month an employer has the option to use a look-back measurement period of up to 12 months instead.

An employee who may work a full-time schedule but is employed for less than six months during the year is considered a “seasonal employee”. Because a seasonal employee only works up to six months during the year, they will generally not average 30 hours per week over a 12 month period due to the fact that they will have very few, if any, hours for many of those months. By adopting this special measurement period, an employer will not have to offer health care coverage to many seasonal employees as they will not be considered full-time by using the longer measurement period.

A 90-day waiting period for eligibility may also be put in place by large employers.  This would allow employees who work full-time for 90 days to be eligible for health care coverage.  There is no penalty to an employer for imposing a 90-day waiting period.

Next time our final discussion will address how the employer mandate rules will be different after 2015.

To learn more about these strategies and how they can be developed for your organization, please feel free to contact us. After all, experts like Paypro are navigating the difficult legal landscape every single day, and can provide trusted guidance and insights that keep organizations like yours compliant and focused on what they do best.