1099 Employee Health Benefits Eligibility: A Guide for Employers

A common question that human resource professionals all over the country are asking is: “are part-time employees eligible for health insurance?”

The short answer is, as always, “it depends.” In brief, your part-time employees are eligible for health insurance if you decide to offer it through your company. This choice, however, is totally up to your organization. Unlike health insurance for full-time employees, offering health insurance to part-time employees is not mandated by federal law.

Read on for a guide for employers on part-time employee benefits eligibility.

What makes an employee part-time?

The Affordable Care Act (ACA) mandates that employers must offer health insurance to employees working at least 30 hours per week, or 130 hours per month for more than 120 days in a row. If an employer fails to do so, they face the assessment of penalties. This is the same standard separating part-time from full-time employees that the IRS provides. If you have a group of employees who is not averaging 30 hours per week, or 130 hours per month for more than 120 in a row, you are not legally required to offer them health insurance.

When are part-time employees eligible for health insurance?  

Now that you know that the choice to offer part-time employees is up to you, you’ll need to decide whether providing these benefits is worth it to your organization. With a competitive labor market and a steep shortage of workers, your company may conclude that offering health insurance to full-time employees is in the company’s best interest when it comes to recruiting and retaining the best talent for part-time roles.

If your company has decided to offer health benefits to part-time employees, here are some things you need to be aware of:  

The Affordable Care Act sets rules on offering health insurance to part-time employees. For example, you must be consistent in your decision to offer health insurance to part-time employees. Under the Affordable Care Act, you can’t pick and choose which full-time employees you offer health insurance to. Similarly, if you decide you will offer health insurance to part-time employees, you must offer health insurance to all similarly situated employees.

You can also offer QSEHRA, or Qualified Small Employer Health Reimbursement Arrangement to your part-time employees, provided you follow the same consistency guideline outlined above.  QSEHRA is a way for smaller companies (with fifty or fewer employees) to reimburse their employees for their medical expenses. It is commonly offered in place of traditional health insurance.

Clearly outline your policy in your employee handbook. The best way to make sure you’re consistent in your offerings is to create a clearly defined policy delineating which factors make employees eligible for insurance at your company. You can choose to offer health insurance to anyone, as we described above, as long as you’re consistent in doing so. For example, if your company wants to offer insurance to any employee who works 15 hours a week or more, you can. If your company wants to offer insurance to employees who were formerly full-time, but who have switched to part-time work, you can choose that route, as well. As long as the terms are plainly defined, they are yours to set!

Check with your health insurance provider to make sure you’re covered. Some health insurance carriers won’t allow you to offer insurance to your part-time employees through their plans. If you find out this is the case with your current carrier, you may consider making a change in that partnership. A qualified health broker like Benely can help you find an insurance carrier that will cover your part-time employees, too.

Be aware of insurance carrier or state-mandated “minimum participation requirements.” Many states and insurance carriers alike mandate that a minimum percent of your employees use your provided health insurance plans. If you don’t believe your part-time employees will actually be interested in the health insurance you offer, you may want to avoid offering it so that you can stay clear of violating these minimum participation requirements.

The Affordable Care Act is a labyrinth for most human resource professionals and small business owners. Do you need guidance deciding whether to offer health insurance to your part-time employees, or advice as to whether your policy is adequately consistent? Want to offer insurance to your part-time employees, but you’ve run into a problem with your current health insurance carrier? Reach out to the employee benefits and compliance experts at Benely, or request a free demo today.