Part-time employees are defined very specifically by PPACA. Part-time employees are those who work less than 30 hours a week on average. This average is not calculated on a week-by-week basis. Instead, a measurement period, also known as a look-back period, is used by employers to determine the average hours an employee works per week. If the product of this examination is less than 30 hours per week, then the employee is classified as a part-time employee.
Part-time employees are defined very simply as non-full-time employees, working less than 30 hours a week on average. If an employee is part-time, no coverage must be offered by the employer, generating immediate savings for the health plan and reduced obligations under PPACA. Thus, by careful and controlled classification, employers can save money.
The look-back measurement method is the main means by which employees are classified. Thus, the importance of this method is again demonstrated for employers, as proper measurements will permit employers to better control eligibility in their health plans.
Part-time employees do not affect employer obligations under the employer mandates. The employer mandates to provide minimum essential coverage, affordability, and minimum value only apply to full-time employees. An employer has no obligation to offer a part-time employee a healthcare plan.
Employers may choose to offer part-time employees healthcare plans. However, if coverage is extended, other PPACA rules apply to the coverage, such as prohibitions on pre-existing condition restrictions or annual limitations on benefits.
Part-time employees do affect an employer’s classification as a small employer or applicable large employer. Part-time hours worked add to the calculation of an employer’s full-time employee equivalency, which then affects the employer’s classification.
LBMC can help you navigate through the extensive ACA requirements, determine any penalty exposure, and develop strategies to eliminate or reduce future penalty exposure.