Navigating the complexities of the Affordable Care Act (ACA) can be challenging for any business, particularly when it comes to understanding the rules around ACA seasonal employees. For small to mid-sized businesses, compliance is not just about avoiding penalties but also about managing costs and ensuring the well-being of all employees.
In this article, we'll demystify the ACA requirements for seasonal employees, provide practical tips for compliance and explain how a PEO, like Axcet HR Solutions, can provide support and ensure compliance.
A seasonal employee is a worker hired for a specific period, usually to manage increased workloads during peak seasons. These employees typically work for a few weeks to several months and their employment is often tied to a particular time of year, such as the holiday season, summer months, or during harvest time in agriculture.
Many people falsely believe seasonal employees are part-time employees but that isn't true. Season employees can work either part-time or full-time. The defining characteristic of seasonal employees is that their employment is inherently temporary and cyclical.
A lifeguard is a common example in the summer, while a ski resort worker is a common wintertime example of a seasonal worker.
Under the ACA, employers with 50 or more full-time employees, including full-time equivalent employees, are considered applicable large employers (ALEs). ALEs must offer health insurance to their full-time employees (those working 30 or more hours per week) or potentially face penalties.
The key points regarding the ACA and seasonal employees are:
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Generally, employers are not required to offer health insurance to seasonal employees who are hired for less than six months and do not meet the full-time threshold (30 hours per week on average) during the measurement period.
However, if an ACA seasonal employee does meet these criteria and is classified as full-time, the employer must offer health insurance to avoid potential penalties.
It's important to understand the ACA look-back period for seasonal employees when deciding on health coverage. ALEs should use their initial measurement period even when they expect temporary employees to work more than 30 hours a week.
With non-seasonal employees, ALEs must offer health coverage by the first day of the fourth month of employment to remain compliant with the employer-shared responsibility portion of the ACA.
The requirement to offer health coverage by the 91st day of employment does not apply to workers who will only remain with the company for six months or less.
However, ALEs cannot deliberately misclassify new full-time employees as seasonal workers for the purpose of using the initial measurement period to determine benefits eligibility.
What this means in practice is that ALEs must offer health insurance to temporary employees expected to work at least 30 hours a week for more than six months. Larger employers that use an initial measurement period of 12 months to avoid offering healthcare coverage by the 91st day of employment will face penalties from the IRS.
ALEs must issue Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to all regular and seasonal employees who qualify for employer-provided health insurance.
Companies that use a monthly rather than a look-back measurement period would need to offer health insurance for ACA seasonal employees who meet the minimum requirement of working 30 hours per week. This provision also comes with an exception.
ALEs that require employees to complete a waiting period before becoming eligible for health insurance may not need to offer it to temporary workers. This is due to the likelihood of them no longer working for the company when the waiting period expires.
The setup of popular seasonal businesses like golf courses and resorts requires employers to hire staff each year. Some people prefer this arrangement due to other obligations and return each season to work for the same organization.
However, it can become more confusing for employers to navigate requirements for ACA seasonal employees.
The ACA allows large employers to begin a new initial measurement period for returning seasonal employees each year. The caveat is that the seasonal worker has a minimum gap of 13 weeks between stints of employment with the same company. With educational organizations, the minimum gap jumps to 26 weeks.
ALEs should start a new measurement period of 12 months on the first day of seasonal employment each year.
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Navigating ACA compliance can be complex, especially with seasonal employees. Axcet HR Solutions, a local Kansas City PEO, offers expert guidance and comprehensive HR services to help your business stay compliant.
From tracking employee hours to managing benefits and ensuring regulatory compliance, Axcet is here to support you. Schedule a consultation today to learn how we can help you achieve peace of mind and focus on growing your business.
By following these guidelines and leveraging professional support, you can effectively manage your seasonal workforce while staying compliant with the ACA.
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