The ACA’s Employer Mandate: What Type of Employees Are Covered?

By Kelline R. Linton,
Junior Associate.

 

The Affordable Care Act’s employer mandate requires large businesses with 50 or more full-time employees to offer health insurance to their full-time employees. This mandate has been postponed until 2015 for large employers (100 or more employees), and 2016 for medium employers (50 to 99 employees). On Wednesday, the Administration further announced that the paperwork for the employer mandate has been simplified.

 

However, what employers do in 2014 will determine whether they meet the definition of a “large” employer when the employer mandate becomes effective.

 

To calculate total full-time employees:

 

_______ Full-Time Employees (number of employees who work at least 30 hours/week)

 

+

 

_______ Full-Time Equivalent Employees (divide the total monthly hours of Part-time employees, those who work < 30 hours/week, by 120)   =   _______ if > 50, the employer is a “large” employer for the employer mandate.

 

The employer mandate calculation and coverage largely depends on the type of employee.

 

Seasonal employees:
• Seasonal employees are employees who work no more than 120 days or 4 months (need not be consecutive).
• “Large” employers need to offer health insurance to seasonal employees who work full-time hours to avoid potential penalties.
• However, seasonal employees are not included in the employer mandate calculation, so an employer with numerous seasonal employees but few regular full-time employees in 2014 will not meet the definition of a “large” employer when the mandate becomes effective.

 

Temporary, full-time employees:
• Temporary (or short-term) full-time employees (not seasonal employees) are employees who work full-time hours for less than 5 months.
• “Large” employers need to offer health insurance to temporary employees by the end of the third full calendar month of their employment to avoid potential penalties.
• “Large” employers do not need to offer health insurance to temporary employees who work less than the 90-day waiting period.

 

Part-time employees:
• Part-time employees are employees who work 20 hours or less per week.
• “Large” employers do not need to offer health insurance to part-time employees.

 

Independent Contractors:
• Independent contractors are workers that a business generally does not control or direct in the way of when, where, how, and what work is performed. The classification is fact specific.
• “Large” employers do not need to offer health insurance to independent contractors.
• Independent contractors are not included in the employer mandate calculation.

 

Although the employer mandate has been postponed, an employer should begin evaluating its employees now to determine whether it is a “large” employer. An employer also should ensure all of its independent contractors are properly classified to avoid any potential penalties. If you have any questions about the employer mandate or classifying workers for the employer calculation, we are available to assist.

 

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