In recent guidance, the IRS advised that policies implemented by employers to prevent part-time and seasonal employees from working 30 hours or more per week may not be sufficient to prevent liability under the Affordable Care Act (ACA) employer mandate.
If an employer is an applicable large employer (ALE), minimum essential health coverage must be offered to at least 95 percent of full-time (30 hours per week) employees (FTEs). An employer becomes an ALE when the company employs at least 50 employees (computed by aggregating part-time employees and determining full-time equivalents) who work on average a minimum of 30 hours per week. The ACA penalizes employers who fail to provide minimum essential coverage to their FTEs through a penalty tax structure.
To prevent such penalties, some employers have implemented policies to restrict part-time and seasonal employees (non-FTEs) from working an average of 30 or more hours per week. However, the IRS recently specified that these policies are not enough to avoid liability. Actual hours count – even if performed in violation of an employer’s policy.Read More