Health care reform legislation passed earlier this year will have significant impacts on individuals and employers. This is particularly true for employers with a seasonal employee population.
In 2014, many significant aspects of health care reform will take effect. This includes, among other things:
- New penalties imposed on applicable large employers if certain full-time employees receive government assistance to purchase coverage through a state-based Exchange;
- An individual mandate requiring U.S. citizens to have health insurance coverage or face penalties;
- The establishment of Exchanges, a new state-based insurance market for individuals and small groups; and
- Additional mandates on health plan coverage.
Employers with a seasonal workforce will want to understand these requirements and the potential impact to their health plans.
Nothing in the law requires an employer to provide health insurance to employees.
However, applicable large employers will face penalties if full-time employees qualify for and receive government assistance (in the form of premium credits or cost-sharing subsidies) to purchase health insurance through the Exchange.
The term full-time employee means an employee who is employed on average at least 30 hours of service per week.
An applicable large employer is an employer who, with respect to a calendar year, employed an average of at
least 50 full-time employees on business days during the preceding calendar year.
To determine whether an employer is an applicable large employer, employers:
- Will need to count employees who do not work full-time (i.e. part-time employees) by dividing the aggregate number of hours worked for a month by 120;
- Will need to consider controlled group rules, as members of a controlled group will be treated as a single employer and all employees will be treated as employed by a single employer; and
- Will not be considered to have employed more than 50 full-time employees if the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year and the employees in excess of 50 employed during the 120-day period were seasonal workers.
Employers with fewer than 50 full-time employees will not face penalties if their employees receive
government assistance and purchase coverage through the Exchange.
Impact to Employers with Seasonal Employees
- If you have more than 50 full-time employees, you will be considered an applicable large employer, potentially subject to penalties.
o Example: In the preceding year, a ski resort has 100 year-round full-time employees and hires
200 seasonal employees for 6 months. Employer will be an applicable large employer as the
employer employed 50 or more employees.
- If you are an employer with 50 or fewer full-time employees, but hire seasonal employees (thus increasing your full-time employee count above 50), you will not be an applicable large employer if your workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year and the employees in excess of 50 employed during the 120-day period were seasonal workers.
Example: In the preceding year, a retail establishment has 30 full-time employees working year round. The retail employer hires 30 seasonal employees to work the holiday season for 60 days. This employer is not an applicable large employer because the workforce only exceeds 50 employees due to seasonal employees who were hired for fewer than 120 days.
When can employees receive government assistance through the Exchange?
Not all employees of an applicable large employer will be eligible for government assistance through the Exchange.
To qualify for government assistance, the employee must have household income between 100%-400% of the Federal Poverty Level, and either have:
- No coverage provided by the employer;
- Employer provided health insurance coverage with an actuarial value below 60% (meaning that the plan’s share of provided benefits is less than 60%), or
- A required contribution toward employer-provided coverage that exceeds 9.5% of their household income.