Healthcare Reform FAQ: Non-Traditional Employees

Healthcare Reform FAQ: Non-Traditional Employees

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The federal Patient Protection and Affordable Care Act has specific implications for employers and their full-time employees.  However, given the variety of employment scenarios that may be utilized by any given business, the law also has specific implications for other employment situations.  Previous Frequently Asked Questions include information on new hires and variable hour and seasonal employees.  The following covers some of the less common employment situations:

Is there a difference between a part-time employee and a variable hour employee?

While there is no specific legal definition that distinguishes the two, the rules regarding certain aspects of the ACA describe variable hour employees as those that work a varying number of hours per week or per work schedule.  As an example, the employee may work 15 hours per week in Week 1, 22 hours per week in Week 2, and 37 hours in Week 3, etc.  Whereas part-time employees are working less than full-time, but work a set schedule that only varies under special circumstances.  An example would be an employee that works Monday through Friday, 8:00-12:00 without variation unless someone is ill or some other circumstance alters the schedule.

The rules implementing the ACA clarify that variable hour employees that work on average 130 hours per month must also be offered health care coverage.

What if I just restrict all employee hours to less than 30 hours per week.  Will that help me avoid having to provide coverage to an extended number of employees?

Potentially.  Recognizing the difference between variable hour and part-time employees, moving all employees to a part-time schedule where they will work a consistent set of hours each month, will help reduce your obligation as there is no requirement for employers to provide coverage to true part-time employees.  Managing variable hour schedules where hours worked are just restricted to less than 30 hours per week with varying days and times, could also help you reduce your obligation.  However, because variable hour employees are potentially eligible for health care coverage, you will want to carefully track the hours of variable hour employees to ensure employees are not consistently exceeding 130 hours per month.  If variable hour employees can demonstrate they have worked on average more than 130 hours per month and you do not provide them with health care coverage, you may be subject to the IRS penalty.

What happens if I use a temporary employee for an extended period of time during the year?

Temporary employees may either be hired directly by the employer or contracted through a staffing agency.  In either situation, as long as the temporary employee is hired for less than a year, the employer is not required to provide health care coverage to the employee.  However, the hours worked by the temporary employee must be considered in determining employer size.

It is especially important to note that if an employer utilizes a temporary employee to backfill behind an employee that is on paid leave, the hours worked by both the permanent employee and the temporary employee must be counted in determining employer size.

I sometimes call my aunt to fill-in on nights when I am short-staffed.  Must I include the hours she works when I determine my employer size?

If your family member receives compensation for the hours they work, the hours must be counted toward employer size.  There is an exception for the owner’s children and other family members that own a portion of the business.  Hours worked by these relatives are not to be included when determining employer size.

I have just been contacted by one of our local colleges asking if I would consider employing an intern from one of their management programs.  What are my ACA obligations if I do so?

There are currently no specific ACA obligations for employers that utilize college interns.   As long as the intern is engaged through an eligible college degree program, you are not required to count the hours worked by the intern when determining your employer size.  You are also not required to provide the intern with health care coverage even if they work what would be considered a full-time schedule.  

Donna Steward, President, Kiawe Public Affairs

This publication is intended to inform employers about provisions of the Patient Protection and Affordable Care Act and how those provisions may affect them.  This information should not be construed as legal or tax advice, and readers should not act upon the information contained therein without professional counsel.

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