When it comes to offering health care coverage, the Affordable Care Act does not require you to offer coverage to seasonal employees. However, there may be times when you hire someone in good faith as a seasonal employee but then decide to transition the employee to permanent, full-time status after the season ends. Perhaps your business is growing and you need additional staff; that’s great news for your business, but you need to be aware of requirements contained within the Affordable Care Act to ensure that you remain compliant.
Who Is a Seasonal Employee?
By ACA definition, a seasonal employee is defined as one who works six months of the year or fewer and whose employment period begins at the same time every year (such as summer or winter). The IRS permits employers to classify their employees using a good-faith definition of seasonal. If, at the end of the season, you decide to transition one or more of your seasonal employees to a full-time employee, there are important aspects of the Affordable Care Act that will impact the transition.
Any employee expected to be of full-time status — working 30 hours per week or more — must be offered health coverage no later than 90 days after the first day of employment. For the purposes of the mandate, the time during which the employee was classed as seasonal is not considered part of the waiting period. Suppose you hire extra help for the holiday season. After the new year, when the holiday rush ends, you decide to hire one seasonal worker to stay on full-time at 30 or more hours per week. The employee starts as a full-time employee on February 1. If your business typically enforces a 90-day waiting period for new employees to join your health plan, that employee must be offered health coverage that starts May 2 (in a nonleap year).
It is important to understand that 90 days does not simply equate to three months. The Federal Register states that the 90-day period is truly 90 days and includes weekends and holidays. Therefore, if you were to begin coverage the first day of the month following the 90-day period, your business would be considered in violation of the employer mandate per the ACA.
Benefits of a Shorter Waiting Period
If it has been customary for your business to provide employee coverage beginning on the first of the month, it would be wise to consider establishing a 60-day waiting period as opposed to a 90-day waiting period. Likewise, if the 91st day of service falls on a weekend or holiday, you will need to offer coverage ahead of the close of the 90-day window to avoid a penalty. This will ensure that you are compliant with the ACA employer mandate and help you avoid any penalties that would be incurred for the violation. Keep in mind that any waiting period is optional, and you are free to begin coverage as soon as employees begin working if you choose.
When confronted with changes in your business, do not hesitate to speak with your broker or legal counsel to ensure that you remain compliant with the mandates and regulations set forth in the Affordable Care Act.
Allison Hutton is an experienced writer, editor, communications professional, researcher and social media consultant. During her more than 15 years of communications and writing experience, Allison has worked with a variety of clients, from small-business owners to Fortune 500 companies. She has an M.S. in entertainment business, a B.A. in communication and lives in Pittsburgh, Pennsylvania, with her husband and four children.