Do You Know How to Define an Employee?

Do You Know How to Define an Employee?

The answer is a little more complicated than you might think—and also more important. Because of the Affordable Care Act, any business with 50 or more full-time equivalent employees is required to provide their full-time employees (and their dependents) with affordable health insurance coverage that meets minimum value requirements (defined by the federal government).

But what exactly is a full-time employee? And are employers expected to provide coverage to part-time or seasonal employees? For mid- or small-sized businesses, the answers to these questions make a big difference when creating health plans. Use the following as a guide:

Full-Time Employees: While employers have historically considered full-time employees to be those who work at least 36 to 40 hours a week, under the Affordable Care Act a full-time employee is one who is employed at least 30 hours per week on average (or an average of 130 hours a month). That definition must include not only hours when work is performed, but also hours when an employee is paid or entitled to payment, such as vacation, holiday, illness or disability, jury duty, military duty or a leave of absence.

Variable-Hour Employees: Employees that cannot be determined to be a full-time employee as of his/her starting date are considered a variable-hour employee.  Some employees may work variable schedules, making it tougher to classify them as full-time or part-time.

Seasonal Employees: This refers to an employee who is hired into a position where the customary annual employment is 6 months or less (and the period should begin each calendar year in approximately the same part of the year such as summer or winter). In certain instances, the employee can still be considered a seasonal employee, even if the seasonal employment is extended beyond the usual length of time.

Part-Time Employee: An employee who is not reasonably expected to be a full-time employee (and who is not considered a variable hour or seasonal employee) as of his/her starting date.

This is a just a short list of the various employee classifications under the Affordable Care Act, so employers are encouraged to review the make-up of their workforce and develop strategies to address any potential issues.  In addition, Blue Cross Blue Shield of Michigan has resources for mid- and small-sized businesses looking to provide coverage to their employees.

 

 

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