Milinda Fraley and Tammy Urquhart, Market Specialists, acumen
Employers may wonder if their company is subject to the 30-hour rule or if they can define what constitutes full time and part time within their company.
The Affordable Care Act’s employer shared responsibility provision requires that all Applicable Large Group Employers (more than 50 employees) must offer qualified health care coverage for all full time employees. According to ACA rules, full time employees are defined as those individuals working an average of 30 hours or more per week.
Small employers (50 or fewer employees) are not subject to the ACA employer shared responsibility rules. Therefore, they are not required to follow IRS guidance under these rules for purposes of determining who is eligible for coverage. This includes using 30 hours per week as the standard for full-time status. In general, small employers have flexibility to set their own eligibility rules for their employer-sponsored coverage.
There is an exception to this rule. Small employers can purchase health insurance coverage for their employees through the Small Business Health Options Program (SHOP). If they exercise this option, they are then subject to the ACA definition of full-time employee:
• Average 30 hours/week (130 hours/month)
• More than 120 days/year
One more thing to note: Employers with fully insured plans may also want to review their insurance carrier documents to see if there are any contractual hours-of-service requirements for employee eligibility.
For additional information, please reference the IRS website: https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer
Clients of Acumen Advisors are also encouraged to contact their Advisor or Account Manager with any specific questions on this topic.