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Must large employers offer health care insurance coverage to their employees? What about seasonal employees?


Under the ACA, if a large employer doesn't offer affordable coverage that provides minimum value to full-time employees and their dependents (in proposed regulations defined as children under 26), and an employee gets a premium tax credit, the employer has to pay a penalty. Enforcement of this penalty has been delayed until plan year 2015. For employer-based coverage to be considered affordable, the premium for the plan's employee-only option must be less than 9.5% of his or her annual household income. To offer minimum value, the plan must pay at least 60% of the medical costs for services the plan covers. HHS and IRS have developed a minimum value calculator.

Large employers are employers with 50 or more full time employees, including full-time equivalent (FTE) employees. Full-time employees are employees with 30 hours or more of service in a week. The number of full-time equivalent (FTE) employees is determined by adding the number of hours of service in a month for all part-time workers and dividing by 120 hours per month. Employers should seek professional advice in making this calculation.

Employers with a large seasonal workforce (such as agricultural workers hired for the harvest season or retail clerks hired for the holiday season) are given leeway under the ACA not to count seasonal employees to decide if they meet the definition of a large employer. If the employer has more than 50 full-time or FTE employees only during 120 or fewer days per year, the employer may not have to count those employees for those months. Professional advice in making this determination is also recommended.

There's detailed information in the IRS proposed regulation: Shared Responsibility for Employers Regarding Health Coverage.

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