['Employee Benefits']
['Patient Protection and Affordable Care Act']
11/21/2023
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The Affordable Care Act (ACA) will require large employers to offer health insurance that meets certain criteria or pay a penalty under the shared responsibility provision. A large employer is one with 50 or more full-time employees, including full-time equivalent employees (FTEs), not counting “seasonal workers.” A full-time employee is one who works 30 or more hours per week, or at least 130 hours per month, with certain exceptions for “seasonal employees.”
While the terms “seasonal employee” and “seasonal worker” sound the same, they are not interchangeable. The ACA has assigned different meanings to these terms.
A “seasonal worker” is an individual who performs labor or services on a seasonal basis for 120 days or fewer per calendar year, such as a retail worker employed exclusively during holiday seasons. A seasonal worker does not have to be counted when determining if you are a large employer with at least 50 employees.
For example, if your workforce exceeds 50 full-time employees (including FTEs), but the employees in excess of 50 were seasonal workers, you are not a large employer and therefore not subject to the shared responsibility provision.
A “seasonal employee” is someone hired into a position for which the customary annual employment is six months or less and for which the employment begins in approximately the same time of the year, such as summer or winter.
This term is relevant when determining an employee’s full-time status, which affects whether a penalty may apply if that employee receives a credit to purchase insurance through an exchange. You may determine an employee’s status during a period (called a stability period) based on the employee’s hours of service in a prior period (called a measurement period). One option is to use a look-back measurement method to determine the full-time status of seasonal employees.
The look-back measurement method is not used to determine if you are a large employer. It is used only to determine the full-time status of an employee.
Even if you are a large employer, you would not be penalized for failing to offer coverage to seasonal employees during the measurement period, even if you expected the employee to work at least 30 hours per week, because the average hours per week could be lower if you evaluate a seasonal employee over a longer period (you may choose a measurement period as long as 12 months).
However, if a seasonal employee did work full time during the measurement period, he or she must be offered coverage during the stability period. In particular, this might happen if you’ve chosen a shorter measurement period (you could choose a measurement period as short as three months).
If you hire seasonal workers or employees, be sure to apply the correct definitions when counting the number of employees or determining the full-time status of employees.
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