How Many Hours Can Seasonal Employees Work Before Needing Insurance Coverage?

Benefits advisor Bud Bowlin advises on the max hours seasonal employees can work before employers are legally required to offer insurance under the ACA.

PEO Considerations

Hey Bud,
We employ a lot of college students and almost all of them want to work full-time hours over the summer. We need the help and are willing to let them, but how long are we allowed to have them do that before we legally have to offer them insurance? I’ve heard that we can let them do it for 90 days and then have to either offer them insurance or cut their hours back to part time. What would you suggest we do?
Seasonal Hours Employees Insurance & Labor Apprehension

Dear S.H.E.I.L.A.

Those are all very good questions which are being asked by a number of people. With summer coming up, lots more employers are probably having the same kinds of questions about seasonal employees. So, let’s dive in and come up with some answers to help guide our hiring practices, and at the same time keep us out of reach of Affordable Care Act (ACA) penalties.
First, some definitions to set the stage. A “seasonal employee” is defined as an employee who is hired into a position for which the customary duration of the job is expected to be six months or less. An example of the term customary refers to an employee hired around the same time each year for a specific time-dependent purpose like a produce harvester. This qualifying becomes particularly important if the employer doing the hiring is an “applicable large employer”, or “ALE”, or per the ACA. ALEs can treat seasonal employees differently than full-time non-seasonal employees in that the ALE does not have to offer the seasonal employee medical benefits. A caution though: misclassifying seasonal versus non-seasonal can result in significant penalties for the employer.
Employers can check the rules in the Employer Shared Responsibility rules set forth in the ACA. Here seasonal employees are distinguished from seasonal workers. A “seasonal worker” is an employee that has worked no more than 120 days or four months during the prior year. This worker category is used in the ALE’s calculation as to whether or not the company is a large employer and subject to large employer rules under the ACA.
So, to revisit your question: Yes, you can hire college students to work full-time over the summer so long as you include them in your calculations as an Applicable Large Employer. Once they work in excess of 130 hours per month for four months or more during the calendar year, they are no longer considered seasonal and you are required to provide them benefits on the same basis as your “full-time” non-seasonal employees. If you keep their hours less than 130 hours per month, then they remain “part-time”.

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