There Are Long-Term Advantages to Offering Health Insurance Benefits to Seasonal and Short-Term Employees
One of the most frequent questions we get about group health coverage is whether California companies must offer health insurance benefits to seasonal employees. One of the second most common questions is why companies should provide such benefits for workers who won’t be around for all that long.
As is so often the case, the answer to those two inquiries is “it depends.” The law does not always require all employers to provide health insurance to either full-time, part-time, or seasonal employees. Whether a California employer must offer health insurance benefits to seasonal employees largely depends on whether they have a similar obligation to provide coverage for full-time employees. In turn, that depends on how many full-time or “full-time equivalent” (FTE) employees are on the company’s payroll.
Businesses With Fewer Than 50 Full-Time Employees Are Not Required to Offer Health Insurance
If your business has fewer than 50 full-time or FTE employees, it is not considered to be an “applicable large employer” (ALE) and is therefore not legally obligated under the Affordable Care Act (ACA) to offer or provide health insurance coverage to employees, regardless of whether they are full-time, part-time, temporary, or seasonal.
Under the ACA, an employee must work 30 hours or more each week or 130 hours each calendar month to be considered full-time, including vacation and paid leave time.
Companies with less than 50 full-time employees may still need to provide coverage if they have 50 or more full-time equivalent employees. The ACA defines FTE as “a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.”
That may sound confusing, but the law provides guidance on how to calculate your number of full-time-equivalent employees:
- Combine the number of work hours of all non-full-time employees for each month but do not include anything more than 120 hours of service per employee;
- Divide that number by 120.
How Seasonal Employees Effect Whether Your Company Is an “Applicable Large Employer” That Must Provide Health Insurance
If you regularly employ seasonal employees, different rules apply to how those workers factor into determining whether your California company qualifies as an ALE that must provide health coverage under the ACA. The ACA generally defines a seasonal worker as someone who performs labor or provides services seasonally. Prime examples include retail workers hired for the holidays, or those employed by ski resorts in the winter.
An employer is not considered an ALE that has more than 50 full-time employees (including FTE employees) if both of the following are true:
- The employer’s workforce exceeds 50 full-time employees (including full-time equivalent employees) for 120 days or fewer during a calendar year, and
- Those employees in excess of 50 who worked during that 120-day period are seasonal workers.
If Your Company Has 50 Or More Full-Time Employees, it Must Offer Health Coverage to Any Full-Time Or FTE Seasonal Employees
If your business has 50 or more full-time or FTE employees, the law considers it an ALE that must offer an ACA-compliant health insurance plan to at least 95% of its full-time employees. As noted, the ACA defines “full-time” as an employee hired with the intent to work 30 or more hours per week, including any seasonal workers who meet or exceed the 30 hours per week threshold. If a seasonal employee works less than 30 hours a week, the employer is not obligated to offer coverage, just as they do not need to provide health benefits to regular part-time employees.
However, if you only expect a temporary or seasonal employee to work at the company for less than 90 days, your company does not need to offer them coverage.
Just Because You Don’t Have to Provide Health Coverage Doesn’t Mean You Shouldn’t
Of course, just because your company proves small enough not to have a legal duty to offer health insurance doesn’t mean you shouldn’t. Employers provide plenty of perks and benefits that aren’t required by law, from company picnics to free coffee to incentives and rewards for exceptional performance. They do so because such actions help them attract and retain top-quality talent in a competitive marketplace.
The same goes for providing health insurance benefits to seasonal employees. All else being equal, a California company that offers health coverage proves more likely to get the candidate it wants than a business that doesn’t provide such benefits. And those employees are more likely to come back when needed.
If You Have Questions About Offering Health Insurance Benefits to Seasonal Employees, We Have Answers
Locally owned and operated, Preferred Insurance helps California small business owners navigate the complicated landscape of health insurance coverage, including their obligations to provide health insurance benefits to seasonal workers. We commit to providing free group health insurance quotes in 48 hours or less.
Contact Preferred Insurance today to schedule a free consultation to discuss your small business health insurance needs.