Ensure ACA compliance for seasonal employees

‘Tis the season for seasonal employment! We typically see an increase in hiring for part-time positions during the autumn months to help meet increased demand around the holidays. In fact, more people are looking for seasonal work than in recent years. According to Indeed Hiring Lab, shares of seasonal job searches were up 33% in September 2022 versus the previous period in 2021 and up 13% from 2020, marking a return to pre-pandemic levels.

At the same time, many companies are cutting back on hiring seasonal employees this year due to inflation and fears of a recession. While the cooler hiring appetite may decrease job seekers’ bargaining power, it is still important for employers to offer sufficient benefits. Beyond demonstrating a concern for workers’ well-being, it is also required by the Affordable Care Act (ACA) to offer specific benefits for seasonal employees to avoid being fined.

Here’s a look at some of the key regulations employers should be aware of during the holiday employment season:

  • Applicable Large Employers (those who employ 50 or more full-time workers) must measure all seasonal employees for eligibility of offers for employer-sponsored health insurance the same way they do for permanent employees
  • If seasonal employees are hired to work full-time hours, the employer must offer them health coverage by the first of the fourth month of their employment. The ACA considers a full-time employee to be one who works 30 hours a week or 130 hours in a month
  • Small employers – those who have fewer than 50 full-time workers on their payroll but may increase to more than 50 FTEs during their busy season – are excluded from this requirement
  • ALEs must offer coverage to at least 95% of their benefits-eligible workforce or face potential 4980H(a) penalties. For tax year 2022, an “A” penalty is $2,750 per full-time employee (minus 30 employees) per year, prorated for each month below the 95% threshold
  • ALEs who offer coverage to at least 95% of their benefits eligible workforce but fail to offer affordable coverage to some of their employees face potential 4980H(b) penalties. For tax year 2022, a “B” penalty is $4,120 per eligible employee per year, prorated for each month the employee does not receive an offer of affordable coverage
  • Employers who are not considered an ALE and increase headcount by hiring seasonal workers are excluded from complying with the Employer Mandate requirements of the ACA

No matter your approach to seasonal employment, it is important to remain compliant and avoid hefty fines. Hear more about 2023 ACA open enrollment with Shandon Fowler in this webinar.