Q: Are Part-Time Employees Eligible for Health Insurance?

Yes, part-time employees are eligible for health insurance, if the employer chooses to offer it to them. However, federal law does not require employers to offer health insurance to part-time employees.   

What is considered part-time employment?

Let’s back it up for a moment: How many hours must a worker put in to be considered a part-time employee? When it comes to health care, you have to follow the Affordable Care Act’s (ACA’s) definition:

Part-time employees work on average less than 30 hours per week, or less than 130 hours per month for more than 120 days in a row.

Offering medical coverage to part-time staff is totally up to you, though it has been trending as a practice with retailers and other companies across a range of industries, such as Lowe’s, Chipotle, REI, Staples, and JPMorgan Chase. It can make you a sought-after employer to job seekers seeking employee benefits for themselves and for their family members who are dependents.

When developing your staffing plan, you can be a small business owner offering perks like employer-sponsored health plans, dental insurance, and vision coverage without being a company size the likes of Starbucks, Walmart, or Costco. Just note that if you do choose to offer health insurance coverage to part-time workers, you must follow the rules set by the ACA. 

What are the rules on offering health insurance to part-time employees?

Here are four steps that ensure you’re able to offer health insurance to part-time employees and remain compliant with ACA requirements for a benefits package.

1. Check with your insurance carrier

Make sure your insurance carrier allows you to offer medical plans to part-timers. Insurance companies have different rules around this. 

If you’re still shopping around for a health insurance plan for your employees, let your insurance broker know that you’re interested in the ability to offer coverage to your staff working part-time hours.

2. Be consistent in how and whom you offer coverage to

According to the ACA, if you offer health insurance to full-time employees, then you have to offer health insurance to all similarly situated full-time employees.

In the same way, if you offer health insurance to part-time employees, you have to offer health insurance to all similarly situated part-time employees. You should clearly articulate and record in your company policy documents the specific factors that make a part-time employee eligible for health coverage … which brings us to the next step.

3. Set your own requirements for part-time eligibility

If you decide to offer health benefits to part-time employees, you can write your own requirements for how those part-timers can qualify for it. It’s a good idea to include this information in your employee handbook

For example, you could set a policy that enables employees to qualify for health insurance if they:

  • Work at least 10 hours a week,
  • Work at least 40 hours per month, or
  • Work for you at all, meaning anyone who is employed by you can get health insurance.

4. Make sure you meet your minimum participation requirements.

Most health insurance carriers and states require that a minimum percentage of your workforce that is eligible for health insurance actually takes you up on it and uses it. Offering health insurance to part-time employees can affect that minimum participation percentage.

What about QSEHRA—can I offer it to part-time employees?

Let’s take a step back, if you don’t know what QSEHRA is, here’s a short explanation: QSEHRA (an acronym for Qualified Small Employer Health Reimbursement Arrangement) is a health benefit that enables employers—who don’t offer health insurance—to help their employees with healthcare coverage. With QSEHRA, an employer can reimburse employees for eligible health insurance premiums and/or certain medical expenses (up to a predetermined amount). 

If your company has less than 50 full-time equivalent employees and has opted to offer a QSEHRA instead of traditional group health insurance, you can include those with part-time work schedules in that arrangement as well. As always, just be sure to be consistent and offer it to all eligible part-time employees equally.

Figuring out health insurance benefits, or healthcare arrangements (in the case of QSEHRA) for your employees can get complicated, so it’s best to work with a broker who can keep your business compliant and select a health insurance plan that’s right for your company and team.

Remember: part-time employees may qualify for other health-related benefits

While providing health insurance for part-timers is optional, providing paid sick days may be required. There are no federal laws that mandate paid sick leave for part-time work, but many states do require that this benefit be provided by employers. 

Your part-time employees may also qualify for the Family and Medical Leave Act—which provides up to 12 weeks of job-protected leave—if your company has 50 or more employees and they’ve worked for your company for at least one year and 1,250 hours. This can occur when, for instance, a full-time worker moves to a part-time role.

Certain states like California, New York, New Jersey, Hawaii, and Rhode Island (as well as the U.S. territory of Puerto Rico) also have disability-related laws. If you live in a state that does, check what your short-term disability and other disability insurance obligations may be for part-time employees.

Likewise, if you’re providing an employer-sponsored retirement plan to your employees with full-time employment, the Employee Retirement Income Security Act (ERISA) may require you to offer your team members with part-time employment the option for enrollment in that retirement-benefits program, too.

Outside of those instances, other perks you could provide part-timers that are similar to full-time benefits would be optional and could include:

  • Vacation time and other paid time off (PTO), other than the sick days covered above
  • Dental coverage
  • Vision insurance
  • Tuition reimbursement
  • Life insurance
  • Flexible spending accounts (FSA) with health insurance

These benefits could make you competitive with other small businesses and a desirable employer, ending up on the job alerts for those who actively seeking employment. With whatever you provide, just make sure you understand how to stay compliant with both federal and state laws.

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