Employers who offer health insurance to their part-time workers must still comply with federal and state regulations. This blog will cover the requirements for offering health insurance to part-time employees, as well as the health benefit options available to employers.
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what is considered part-time employment?
Business owners often think of a full-time job as someone who works 40 hours or more per week. part-time employees typically work an average of 30 hours or less per week, or less than 130 hours per month for more than 120 days in a row.
Other than the basic criteria, the Fair Labor Standards Act and other labor laws do not outline specific requirements. Individual employers generally determine what they consider part-time hours.
Employers should also be aware of state and local laws that may dictate what is considered part-time work. It is the employer’s responsibility to choose the maximum hours for a part-time worker and communicate this to their employees in writing during the hiring process.
Do employers have to offer health insurance to their part-time workers?
The Affordable Care Act (ACA) Employer Mandate requires applicable large employers (ALES) with more than 50 full-time equivalent (FTE) employees to offer affordable health insurance to their workers. or are subject to a tax penalty. ACA defines full-time employees as those who work at least 30 hours per week.
If you are under 50 feet, you are not required to offer health insurance to any of your employees. If you work with part-time employees who work less than 30 hours a week, you do not have to provide health insurance to them, even if you are providing insurance to your full-time workers.
Even if it’s not a legal requirement, employers can offer their part-time employees health insurance if they choose. Offering health insurance benefits to those in part-time positions can help improve employee retention, boost workplace morale, and increase job satisfaction.
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what are the requirements to offer health insurance to part-time employees?
Providing health insurance is one of the main employee benefits you can offer in your organization. But before you begin, part-time employee eligibility depends on federal and state laws, your insurance provider, and other factors.
We’re going to dive into the two main requirements for offering health insurance to your part-time employees in the following sections.
According to the ACA, health care benefits must be offered on a consistent basis to all similarly situated employees. This means that an employer cannot offer health insurance to one part-time worker, but deny health coverage to another part-time employee who works the same number of hours and the same type of job.
Employers must create a written document within their company’s policy guidelines that outlines the health insurance eligibility requirements for part-time employees. individual companies can set their own regulations regarding eligibility, as long as they are clearly articulated and applied consistently.
Insurance companies have different rules about offering health insurance to part-time employees. Some insurers have policies that allow them to offer health insurance to part-time workers, while others prohibit it altogether. That’s why it’s important to check with your insurance company before providing health coverage to your part-time workers.
In addition, some insurance companies have minimum participation requirements for their health insurance policies. This means that of all eligible employees offered your medical plan, a minimum percentage of them must purchase and use it.
If you offer health insurance to your part-time employees, it will be counted toward your participation requirements. Employers should consider this aspect so that their minimum participation rate is met according to their insurance carrier’s guidelines.
how employers can offer a health benefit to their part-time employees
Just because you’re not required to offer health insurance to your part-time staff doesn’t mean employers shouldn’t. Hourly wages are always important, but part-time job seekers usually expect some sort of fringe benefit that is presented to them during the hiring process. Fortunately for small employers, there are cost-effective health benefit options for your full-time and part-time employees’ health care needs.
Next, we’ll look at two health care benefit options for employers of all sizes that are increasing in popularity: health reimbursement arrangements (HRAs) and health stipends.
health reimbursement arrangements (hras)
An HRA is an employer-sponsored health benefit that allows employers to reimburse their employees for qualified medical expenses and sometimes individual health insurance premiums.
hrs are beneficial for both employers and employees. Employer contributions are tax deductible and payroll tax free, plus employee reimbursements are income tax free, as long as your health insurance policy meets minimum essential coverage (MEC).
hrs are not pre-funded accounts. Employers set the desired monthly allowance amount, and employees are only reimbursed when they incur an eligible expense. Unlike health savings accounts (HSAs), HRA funds remain with the employer when an employee leaves the company.
There are three popular types of HRAS, the first is a Small Employer Qualified HRA (Qsehra). qsehras are for employers with fewer than 50 employees that do not offer group health insurance.
When a qsehra is offered, it is automatically available to all full-time w-2 employees. but employers can offer it to part-time employees as long as they receive the same amount of allowance as their full-time employees.
The other two HRAs for employers of any size are the Individual Coverage HRA (ICHRA) and the Integrated HRA, or Group Coverage HRA (GCRA). The biggest difference between the two is that ichras only work with individual health insurance, like qsehra, while integrated hras coordinate with group health insurance.
Both ichras and built-in hras have the ability to set specific employee classes. Employee classes separate employees into groups based on legitimate job-based criteria, such as part-time employees.
ichras have 11 employee class options and integrated hras have seven. Employees in different classes may be offered different allowance amounts, but those in the same class must be offered the same allowance.
Find out which HRA is right for you with our HRA Quiz
A health stipend is a fixed amount of money offered to employees to help pay for a health insurance plan and other medical expenses. they are a good option for businesses that don’t want to deal with restrictive and expensive group health insurance plans.
stipends are a very flexible health benefits option. employees can choose the health care elements that fit their needs, and employers can choose monthly allowance limits, giving them full control over the costs of their health care benefits. Better yet, both full-time and part-time employees are eligible to receive a stipend.
however, stipends are less regulated than hrs. Employers cannot make their employees prove that they spent their allowance on a health insurance policy or health care items. Additionally, stipends are typically added to an employee’s paycheck as additional income, so they are subject to income taxes.
workperks is a software platform powered by peoplekeep for businesses of all sizes that helps employers offer reimbursable fringe benefits like an employee stipend. With WorkPerks, you’ll be able to offer your full-time and part-time workers comprehensive employee benefits.
Read about more pros and cons of health insurance stipends on our blog
Offering health benefits to better recruit part-time employees has several advantages. While not required by law, employers can better attract and retain talent, promote a healthy workforce, and show their employees that they care about their well-being, whether they’re employed full-time or part-time.
With an hour or a stipend, your part-time staff will have a personalized health benefit that meets all your health care needs without breaking your budget. Contact peoplekeep today and get the perfect health benefits solution for your organization.