PPACA Presents Special Challenge Concerning Part-time Workers

While the government defines a full-time employee as someone who works 30 or more hours a week, the status of those who work less is not always clear, said Amy Bergner, a partner in Mercer’s Washington Resource Group, during a webcast.

Some employers have temporary or seasonal employees whose hours fluctuate. This raises the question: are they part-time or full-time employees?

The question is important because seasonal and part-time employees could qualify for coverage tax credits, and the PPACA generally requires employers with an average of at least 50 full-time employees (“applicable large employers”) that do not offer the opportunity to enroll in minimum essential coverage to full-time employees and have at least one employee receive a federal tax credit for coverage through an Exchange to pay a $2,000 annual fee for each full-time employee (minus the first 30), as calculated on a monthly basis.   

In addition, applicable large employers that offer minimum essential coverage to full-time employees and have at least one full-time employee receive a federal tax credit for Exchange coverage (because the employer coverage does not provide minimum value or is unaffordable), are required to pay the lesser of $3,000 for each full-time employee receiving the credit or $2,000 per employee for each full-time employee, after subtracting the first 30.   

One proposed solution by lawmakers is to allow employers to “look back” over a certain time period, such as a year (see “Seasonal Employees Under the PPACA”) to calculate an “average” of hours worked. This could cause seasonal or part-time employees to fall out of the definition of full-time.

“We do expect to hear more from regulators on that issue hopefully in the next few months,” said Bergner. “But for now it’s something employers can start working at in terms of their workforce.”