No. The ACA provides that employers are subject to play-or-pay taxes only with respect to their “full-time” employees. For this purpose, the ACA defines a full-time employee as one who works on average 30 or more hours per week with respect to any month.
The government recognized that offering health insurance coverage or determining employer tax obligations on a monthly basis would not be feasible for employers with employees who work on a part-time or intermittent basis and whose hours are variable or otherwise uncertain. To address those concerns, the law will allow employers to use a “look-back measurement period” of up to 12 consecutive months to determine an employee’s full-time status for purposes of benefits eligibility.
Employers can use the look-back method for both “ongoing” employees (those who already have worked a full measurement period) and for new “variable-hour” employees. Variable-hour employees are those whose work patterns, on their start date, are expected to be of limited and uncertain duration. The final employer rules list several factors employers must take into account in determining whether a worker is a new variable-hour employee subject to the look-back rules. General factors include, but are not limited to:
- Whether the employee is replacing an employee who is full-time or variable-hour.
- The extent to which the hours of service of employees in similar positions vary above and below 30 hours, and whether the work hours were communicated to the employee.
Additional factors apply in determining whether temporary staffing firm employees are variable-hour:
- Whether other employees of the staffing firm in the same position retain the right to reject assignments; whether they typically have periods during which no assignments are offered; whether they typically are offered assignments for different periods of time, and whether the assignments offered typically do not extend beyond 13 weeks.
Assuming an employer chooses a 12-month look-back period, an employee who qualifies as ongoing or variable-hour will have to work at least 1,560 hours over 12 months to be considered full-time.
Based on the guidance issued to date, we expect that most temporary employees assigned by staffing firms will qualify as variable-hour and therefore will be ineligible to enroll in a staffing firm’s health insurance plan unless they work full-time during the applicable look-back period. However, employees who at the start are reasonably expected to work full-time for predictable, longer periods of time (e.g., information technology and professional employees) generally will be treated as non-variable hour, in which case they will be eligible for benefits at the time of hire.
In addition to excluding employees who have not achieved full-time status, staffing firms also can exclude for penalty purposes the following individuals, provided the staffing firm offers a plan that provides minimum essential coverage to at least 70% of its full-time employees (and their dependents):
- Employees who opt out of the staffing firm’s plan for reasons other than plan unaffordability or failure to provide minimum value—e.g., they are covered by a spouse’s or parent’s plan.
- Employees who elect to enroll in the employer’s plan even though it is “unaffordable” or does not provide minimum value.
- Employees enrolled in a state Medicaid program.
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