Full-Time, Part-Time, and Temporary Employees: Understanding the ACA’s Definition for Compliant Reporting
Managing Affordable Care Act (ACA) compliance can be quite challenging when you have full-time, part-time, and temporary employees who work different hours. To comply with the ACA, companies must accurately track and report their offer of health coverage for each worker type.
Navigating ACA Compliance with Employee Working Hours
In order to figure out eligibility, affordability, and coverage offerings for multiple types of employees working different hours, you must first determine the type of employee, their hourly schedule, and their coverage options.
The ACA requires companies that staff over 50 full-time employees to provide them with health insurance. An employer that fails to provide their employees with affordable health insurance coverage must pay a penalty. For this reason, a company must determine exactly how many workers it employs.
Most individuals do not need insurance as of 2017, but employers with more than 50 full-time or full-time equivalent employees must provide it. Additionally, state mandates in California, D.C., Massachusetts, New Jersey, and Rhode Island legally require employers to offer health insurance no matter how many employees they have.
To navigate ACA compliance, you will need to understand which workers qualify as full-time, part-time, or temporary, along with seasonal employment laws and ACA temporary employee benefits.
Full-Time Employees and Full-Time Equivalents (FTEs)
How can you determine if your employees are full-time? What do you need to do to be ACA-compliant if your employees are full-time workers? First, we need to look at the full-time employee definition.
What Constitutes a Full-Time Employee?
How many hours are considered “full-time” for health insurance purposes? The IRS definition of a full-time employee is an employee who works, on average, a minimum of 30 hours per week in a calendar month or completes 130 hours of service per month.
The IRS defines an “hour of service” as every hour for which an employee performs duties for the employer and either gets paid or is entitled to payment for the work. An “hour of service” also includes every hour the employee gets paid or is entitled to payment for paid time off; such as for vacation, a leave of absence, jury duty, incapacity, illness, or military duty.
Employers can use the “monthly” measurement method or the “look-back” measurement method to identify full-time employees.
ACA Requirements for Full-Time & Full-Time Equivalent (FTE) Employees
Under the Affordable Care Act, full-time employees work an average of either 30 hours or more in a week or 130 hours during the month. Employers with over 50 full-time employees must comply with ACA requirements.
Full-time employees who work at least 30 hours per week in any month are counted as one full-time employee. Even if an employer has fewer than 50 full-time employees, they may still need to comply with ACA requirements, because the Affordable Care Act also includes full-time equivalent (FTE) employees.
An employer must consider the number of hours worked by part-time employees each month to calculate how many full-time employees they would need to work those same hours.
Once you determine how many FTE employees you employ, you must combine that number with the number of full-time employees. Then use this total to decide whether your organization meets the ACA-mandated employee threshold of 50 full-time employees.
In this calculation of full-time equivalent employees, an employer does not need to include seasonal workers or employees with health coverage under a VA health program or TRICARE.
Next Steps If You Have Full-Time Employees or FTE Employees
What are the next steps if you have full-time employees? To comply with the ACA if you have full-time employees, follow these steps:
- Evaluate the group health plan’s grandfathered status.
- Review the plan documents to determine if the benefits require changes.
- Examine tax-favored arrangements.
- Provide the required notices to employees and their dependents.
- Comply with the ACA’s pay-or-play responsibilities.
- Meet the requirements for information reporting.
Part-Time & Variable Employees
How can you determine if you have part-time and/or variable-hour employees? What do you need to do to be ACA-compliant if your employees are variable-hour workers? Do you need to provide health insurance for part-time, hourly employees?
What Constitutes a Part-Time Employee?
The definition of a part-time employee is anyone who works under 30 hours. While this may seem similar to variable-hour employment, these types of workers are different due to a variety of factors.
The ACA defines someone as a variable-hour employee if, based on the facts and circumstances on the employee's start date, an employer cannot determine whether the employee is reasonably expected to work an average of at least 30 hours per week during the initial measurement period because the employee's hours are variable or uncertain.
What Constitutes a Variable-Hour Employee?
A variable-hour employee works part-time hours that are uncertain or irregular, making it difficult to determine whether they work at least an average of 30 hours per week. There are several factors to consider when evaluating whether a new hire is a variable hour-employee, including:
Whether employees who are in the same or similar positions are or are not full-time workers.- Whether the new employee is replacing another employee who was or was not a full-time worker.
- Whether the job description or contract documents specific responsibilities or otherwise describes the position as requiring at least 30 hours of service each week.
No one factor alone can determine whether a new hire is a variable-hour employee, and several elements may come into play.
ACA Requirements for Part-Time or Variable-Hour Employees
The Affordable Care Act's part-time or variable-hour employee requirements state that some benefits are mandatory for every employee, regardless of the number of hours they work. The ACA mandates that employers must offer unemployment benefits, overtime payment rates, and workers’ compensation benefits to both part-time and full-time employees.
Although the hours an employee works during the stability period won’t affect their status, these hours will count toward the next measurement period. During future measurement periods, changes in average weekly hours that a part-time or variable-hour employee works may change their eligibility status during subsequent stability periods.
Next Steps If You Have Part-Time or Variable-Hour Employees
What are the next steps if you have part-time or variable-hour employees? An applicable large employer identifies which of these employees they need to treat as full-time employees by:
- Calculating the average weekly hours the employee works during a “look-back” measurement period.
- Locking in the status of the employee during the stability period.
Seasonal Employees
How can you determine if your employees are seasonal? What do you need to do to be ACA-compliant if you employ seasonal workers?
What Constitutes a Seasonal Employee?
What defines a seasonal employee? Are teachers seasonal employees? The law treats seasonal employees like variable-hour employees. For a worker to be a seasonal employee, they need to work in a position for which the customary yearly employment is a maximum of 120 days.
“Customary” refers to the nature of the position the employee typically works for six months or fewer. The period of employment must begin at about the same time each calendar year, such as winter or summer. For example, a golf instructor at a resort may work for six months out of the year, making them a seasonal employee.
ACA Requirements for Seasonal Employees
What are the ACA seasonal employees’ requirements? An applicable large employer (ALE) that uses the “look-back” measurement method may not be liable for penalties due to ACA employer shared responsibility if it does not offer health coverage to its seasonal employees during the initial measurement period.
This rule may apply even if these employees work full-time hours at some point, with the exception that workers use a short-cycle measurement period and these employees stay employed during the subsequent stability period.
For seasonal employees, an ALE will use the initial measurement period, even if they hire employees to work more than 30 hours a week. The normal requirement of offering health insurance by the first day of an employee’s fourth month of employment doesn’t apply to seasonal employees, even when they work more than 30 hours a week during their season of employment.
Though it is unusual, the law would continue to classify a seasonal employee as such if their employment during a particular year extends beyond the customary period.
EXAMPLE:
A resort may ask golf instructors who typically work six months annually to continue working for an additional month due to unusually mild weather. Under the ACA, these workers would still be seasonal.
Next Steps If You Have Seasonal Employees:
To comply with the ACA if you have seasonal employees, follow these steps:
- Track seasonal hires.
- Ensure your workers meet seasonal status.
- Check and update seasonal employee information every month.
- Track seasonal employee hours.
Temporary and Short-Term Employees
How can you determine if your employees are temporary or short-term employees? What do you need to do to be ACA-compliant if your employees are temporary workers?
What Constitutes a Temporary or Short-Term Employee?
The ACA refers to temporary employees as short-term employees. These employees accept positions that are shorter than 12 months in length.
ACA Requirements for Temporary or Short-Term Employees
Do temporary employees get benefits under the ACA?
How are ACA and temporary staffing agencies related? Unless these workers meet the requirements of seasonal employees, ACA temporary employees are not exempt from the penalties for short-term, temporary employees.
Temporary employees who do not meet the requirements for seasonal employees and who work more than 30 hours a week fall under the classification of full-time employees who are eligible for benefits under the applicable ACA rules.
Next Steps If You Have Temporary or Short-Term Employees
If you have short-term employees, track employee hours with SyncStream to save your company time and resources. No one wants to scramble to find the right information before it’s time to file. For staffing agencies, this can be particularly challenging.
Have Questions or Need More Information?
Managing Affordable Care Act (ACA) compliance can be quite challenging when you have full-time, part-time, and temporary employees who work different hours. To comply with the ACA, companies must accurately track and report their offer of health coverage for each worker type.
Navigating ACA Compliance with Employee Working Hours
In order to figure out eligibility, affordability, and coverage offerings for multiple types of employees working different hours, you must first determine the type of employee, their hourly schedule, and their coverage options.
The ACA requires companies that staff over 50 full-time employees to provide them with health insurance. An employer that fails to provide their employees with affordable health insurance coverage must pay a penalty. For this reason, a company must determine exactly how many workers it employs.
Most individuals do not need insurance as of 2017, but employers with more than 50 full-time or full-time equivalent employees must provide it. Additionally, state mandates in California, D.C., Massachusetts, New Jersey, and Rhode Island legally require employers to offer health insurance no matter how many employees they have.
To navigate ACA compliance, you will need to understand which workers qualify as full-time, part-time, or temporary, along with seasonal employment laws and ACA temporary employee benefits.
Full-Time Employees and Full-Time Equivalents (FTEs)
How can you determine if your employees are full-time? What do you need to do to be ACA-compliant if your employees are full-time workers? First, we need to look at the full-time employee definition.
What Constitutes a Full-Time Employee?
How many hours are considered “full-time” for health insurance purposes? The IRS definition of a full-time employee is an employee who works, on average, a minimum of 30 hours per week in a calendar month or completes 130 hours of service per month.
The IRS defines an “hour of service” as every hour for which an employee performs duties for the employer and either gets paid or is entitled to payment for the work. An “hour of service” also includes every hour the employee gets paid or is entitled to payment for paid time off; such as for vacation, a leave of absence, jury duty, incapacity, illness, or military duty.
Employers can use the “monthly” measurement method or the “look-back” measurement method to identify full-time employees.
ACA Requirements for Full-Time & Full-Time Equivalent (FTE) Employees
Under the Affordable Care Act, full-time employees work an average of either 30 hours or more in a week or 130 hours during the month. Employers with over 50 full-time employees must comply with ACA requirements.
Full-time employees who work at least 30 hours per week in any month are counted as one full-time employee. Even if an employer has fewer than 50 full-time employees, they may still need to comply with ACA requirements, because the Affordable Care Act also includes full-time equivalent (FTE) employees.
An employer must consider the number of hours worked by part-time employees each month to calculate how many full-time employees they would need to work those same hours.
Once you determine how many FTE employees you employ, you must combine that number with the number of full-time employees. Then use this total to decide whether your organization meets the ACA-mandated employee threshold of 50 full-time employees.
In this calculation of full-time equivalent employees, an employer does not need to include seasonal workers or employees with health coverage under a VA health program or TRICARE.
Next Steps If You Have Full-Time Employees or FTE Employees
What are the next steps if you have full-time employees? To comply with the ACA if you have full-time employees, follow these steps:
- Evaluate the group health plan’s grandfathered status.
- Review the plan documents to determine if the benefits require changes.
- Examine tax-favored arrangements.
- Provide the required notices to employees and their dependents.
- Comply with the ACA’s pay-or-play responsibilities.
- Meet the requirements for information reporting.
Part-Time & Variable Employees
How can you determine if you have part-time and/or variable-hour employees? What do you need to do to be ACA-compliant if your employees are variable-hour workers? Do you need to provide health insurance for part-time, hourly employees?
What Constitutes a Part-Time Employee?
The definition of a part-time employee is anyone who works under 30 hours. While this may seem similar to variable-hour employment, these types of workers are different due to a variety of factors.
The ACA defines someone as a variable-hour employee if, based on the facts and circumstances on the employee's start date, an employer cannot determine whether the employee is reasonably expected to work an average of at least 30 hours per week during the initial measurement period because the employee's hours are variable or uncertain.
What Constitutes a Variable-Hour Employee?
A variable-hour employee works part-time hours that are uncertain or irregular, making it difficult to determine whether they work at least an average of 30 hours per week. There are several factors to consider when evaluating whether a new hire is a variable hour-employee, including:
Whether employees who are in the same or similar positions are or are not full-time workers.- Whether the new employee is replacing another employee who was or was not a full-time worker.
- Whether the job description or contract documents specific responsibilities or otherwise describes the position as requiring at least 30 hours of service each week.
No one factor alone can determine whether a new hire is a variable-hour employee, and several elements may come into play.
ACA Requirements for Part-Time or Variable-Hour Employees
The Affordable Care Act's part-time or variable-hour employee requirements state that some benefits are mandatory for every employee, regardless of the number of hours they work. The ACA mandates that employers must offer unemployment benefits, overtime payment rates, and workers’ compensation benefits to both part-time and full-time employees.
Although the hours an employee works during the stability period won’t affect their status, these hours will count toward the next measurement period. During future measurement periods, changes in average weekly hours that a part-time or variable-hour employee works may change their eligibility status during subsequent stability periods.
Next Steps If You Have Part-Time or Variable-Hour Employees
What are the next steps if you have part-time or variable-hour employees? An applicable large employer identifies which of these employees they need to treat as full-time employees by:
- Calculating the average weekly hours the employee works during a “look-back” measurement period.
- Locking in the status of the employee during the stability period.
Seasonal Employees
How can you determine if your employees are seasonal? What do you need to do to be ACA-compliant if you employ seasonal workers?
What Constitutes a Seasonal Employee?
What defines a seasonal employee? Are teachers seasonal employees? The law treats seasonal employees like variable-hour employees. For a worker to be a seasonal employee, they need to work in a position for which the customary yearly employment is a maximum of 120 days.
“Customary” refers to the nature of the position the employee typically works for six months or fewer. The period of employment must begin at about the same time each calendar year, such as winter or summer. For example, a golf instructor at a resort may work for six months out of the year, making them a seasonal employee.
ACA Requirements for Seasonal Employees
What are the ACA seasonal employees’ requirements? An applicable large employer (ALE) that uses the “look-back” measurement method may not be liable for penalties due to ACA employer shared responsibility if it does not offer health coverage to its seasonal employees during the initial measurement period.
This rule may apply even if these employees work full-time hours at some point, with the exception that workers use a short-cycle measurement period and these employees stay employed during the subsequent stability period.
For seasonal employees, an ALE will use the initial measurement period, even if they hire employees to work more than 30 hours a week. The normal requirement of offering health insurance by the first day of an employee’s fourth month of employment doesn’t apply to seasonal employees, even when they work more than 30 hours a week during their season of employment.
Though it is unusual, the law would continue to classify a seasonal employee as such if their employment during a particular year extends beyond the customary period.
EXAMPLE:
A resort may ask golf instructors who typically work six months annually to continue working for an additional month due to unusually mild weather. Under the ACA, these workers would still be seasonal.
Next Steps If You Have Seasonal Employees:
To comply with the ACA if you have seasonal employees, follow these steps:
- Track seasonal hires.
- Ensure your workers meet seasonal status.
- Check and update seasonal employee information every month.
- Track seasonal employee hours.
Temporary and Short-Term Employees
How can you determine if your employees are temporary or short-term employees? What do you need to do to be ACA-compliant if your employees are temporary workers?
What Constitutes a Temporary or Short-Term Employee?
The ACA refers to temporary employees as short-term employees. These employees accept positions that are shorter than 12 months in length.
ACA Requirements for Temporary or Short-Term Employees
Do temporary employees get benefits under the ACA?
How are ACA and temporary staffing agencies related? Unless these workers meet the requirements of seasonal employees, ACA temporary employees are not exempt from the penalties for short-term, temporary employees.
Temporary employees who do not meet the requirements for seasonal employees and who work more than 30 hours a week fall under the classification of full-time employees who are eligible for benefits under the applicable ACA rules.
Next Steps If You Have Temporary or Short-Term Employees
If you have short-term employees, track employee hours with SyncStream to save your company time and resources. No one wants to scramble to find the right information before it’s time to file. For staffing agencies, this can be particularly challenging.
Receive Our Newsletter
Resources
SyncStream Solutions, LLC is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP® or SHRM-SCP® recertification activities.
Copyright © 2024 SyncStream Solutions, LLC. All Rights Reserved