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ACA Seasonal Employees Health Insurance Requirements

Navigating Health Insurance Compliance for ACA Seasonal Employees

By Kellie Rondon on Jun 17, 2024
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Seasonal Employee at Garden Center and ACA Compliance

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.

What Is an ACA Seasonal Employee?

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.

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What Does the ACA Require of Employers?

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:

  • Counting ACA Seasonal Employees

    When determining if an employer is an ALE, seasonal employees who work less than 120 days in a year are excluded from the full-time employee count regardless of whether the 120 days occur consecutively or not.

    A secondary provision to this exception is when any workers in excess of 50 meet the definition of seasonal workers. The IRS does not classify businesses that meet both of these criteria as ALEs.
  • Look-Back Measurement Method

    Employers can use this method to determine if ACA seasonal employees should be considered full-time. This involves assessing the employee’s average hours over a specified period.

RELATED: Applicable Large Employer - Laws Affecting Businesses with 50 or More Employees >>

Do You Have to Offer Health Insurance to Seasonal Employees?

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.

Understanding the ACA Look-Back Period

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.

Exemptions and Misclassification

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.

Practical Implications

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.

Reporting Requirements

ALEs must issue Form 1095-CEmployer-Provided Health Insurance Offer and Coverage, to all regular and seasonal employees who qualify for employer-provided health insurance.

Monthly Measurement Period

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.

Waiting Periods

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.

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What About Seasonal Employees Who Return Every Year?

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.

RELATED: State & Federal Compliance - The Eight Most Common Wage & Hour Mistakes >>

Tips for Compliance

  • Track Hours Accurately

    Implement systems to monitor and record hours worked by all employees, including seasonal ones.
  • Use the Look-Back Method

    This method helps in determining the full-time status of ACA seasonal employees over a defined period.
  • Document Employment Terms

    Maintain clear records of the seasonal nature of the employment to support compliance efforts.
  • Communicate Clearly

    Ensure employees understand their employment terms and benefits eligibility.
  • Stay Informed

    Regularly review ACA guidelines and consult with HR professionals to stay updated on any changes.

RELATED: Remote Work - Four Key HR Compliance Concerns >>

How Axcet HR Solutions Can Help with ACA and Seasonal Employees Compliance

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.

the three things small businesses need to know about offering health


Written by Kellie Rondon

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