Beginning in 2016, employers with 50 or more employees will have to offer health insurance plans to employees or face a stiff penalty. The regulations for who must be covered are complex. It’s important for you to understand these requirements so you can figure out how to keep your business compliant.
Under the Affordable Care Act, companies are supposed to provide health insurance for their full-time employees. These are employees who average at least 30 hours of work per week. This requirement only kicks in if you have 50 or more full-time equivalent employees (FTEs). FTEs consist of your full-time employees and an additional number based on the number of hours your part-time employees work. HealthCare.gov has a calculator to help you determine your FTE number.
If you have 50–99 FTEs, you must provide health insurance to your full-time employees once the ACA mandate starts in 2016. Otherwise, you’ll owe an extra tax penalty, known as the Employer Shared Responsibility payment, to the IRS.
You do not need to provide health insurance to your part-time employees to comply with the new regulations. Employees who average fewer than 30 hours per week or 130 hours in a calendar month are considered part-time. While part-time employees do impact the calculation to determine whether you need to cover your full-time employees, you are not required to cover part-timers. If you choose to cover them at all, the insurance you offer to part-time employees does not have to meet the minimum acceptable coverage requirements.
A seasonal employee is someone who works six months or fewer in a year and whose employment is intended to be temporary. Seasonal positions usually happen around the same time each year, such as when retail workers are hired for the holiday season or staff are hired in a resort community during tourist season. You are not required to offer health insurance to seasonal employees regardless of how many hours they work, according to Businessweek. You may choose to offer insurance, but as with part-timers, you are free to offer different or lesser coverage.
If you fall under the mandate, you also need to provide coverage for your employees’ dependents, as the Department of Labor notes. Under the ACA, you need to offer coverage to the children of employees until age 26. Previous regulations required dependents over 18 to be full-time students, but that condition is no longer in effect. If they choose, dependents can remain on their parents’ insurance regardless of if they are in school, employed or have coverage available to them from other sources.
The ACA does not require employers to cover the spouses of employees because the law did not define spouses as dependents. While most insurance plans that cover dependents typically cover spouses as well, this could change in the future because of this new ruling. Some large corporations are charging a yearly fee for adding a spouse.
When you review your costs for health insurance plans, remember that you’ll likely have to provide coverage for more than just the number of full-time employees. Knowing exactly to whom you should offer insurance will help you avoid penalties.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.
David Rodeck is a professional freelance writer based out of Delaware. Before writing full-time, he worked as a health- and life-insurance agent. He specializes in making insurance, investing and financial planning understandable.