By now, you’ve likely heard about the changes to the Patient Protection and Affordable Care Act (PPACA) (Pub. L. No. 111-148) and how they relate to health insurance for seasonal workers. We know you are concerned about how this might impact your ability to hire seasonal workers and the implications for park and recreation programs that depend on seasonal workers for success.
Well, you can breathe easy now – the IRS has recently released guidelines that help clarify this regulation and the NRPA Public Policy Team has compiled the details you need to know to understand the changes and guidelines.
As originally written, the PPACA required large employers, including local governments, to offer health insurance to full-time seasonal employees who averaged 30 hours per week and worked 120 days or more during the year. The Act further required that the employee had to be offered insurance within the first 90 days of employment. The implications of this provision meant that employers were required to offer seasonal employees, who averaged 30 hours per week, health insurance and that employee could be eligible for employer- sponsored health insurance for just 30 days. This provision also subjected employers to obligations under the Consolidated Omnibus Budget Reconciliation Act (COBRA) upon the termination of the employee, and created an abundance of administrative burdens for employers.
IRS Guidelines Grant a Reprieve
Recently released IRS guidelines (IRS Notice 2012-58) allow employers to use a look-back/stability period safe-harbor method to determine whether a seasonal employee is a full-time employee.
Under this method:
- The determination as to whether an employee must be offered and provided health insurance is no longer based on the 120 day threshold
- Employers are no longer required to offer employees health insurance on or before day 90
- Employers may now create their own “defined measurement period,” which can span between 3 and 12 months and have the flexibility to determine the start and end months for the measurement period when determining an employee’s full-time status
- An employee who averages at least 30 hours of work per week during the measurement period will be considered a full-time employee; however, employers will not be required to offer health insurance during the measurement period
The IRS guidelines include a “stability period,” which immediately follows the measurement period set by the employer. If an employee is determined to be full-time during the measurement period, they would be treated as a full-time employee during the stability period regardless of the number of hours worked during the stability period.
So, during the stability period, an employer would need to offer health insurance benefits to those employees determined to be full-time during the measurement period even if the employee worked less than 30 hours per week during the stability period. If an employee was not a full-time employee during the measurement period, he/she will not be treated as a full-time employee during the stability period.
It is important to note that an employer is not required to offer or provide insurance to part-time employees.
The IRS has stated that employers may rely on the guidance regarding seasonal employees provided in Notice 2012-58 through the end of 2014. We do expect, however, future changes will come to many of the recently released regulations. NRPA will keep you updated and informed on the changes and what it means for your agency and local government.
For further information, you may also want to read the recent article in Parks & Recreation to delve into the issue.
**Disclaimer: Nothing in this article should be construed as legal advice or a legal opinion. Please consult your city/county attorney regarding interpretation and compliance strategies.
Written by: Stacey Pine, NRPA Vice President of Government Affairs