Is an employer required to offer coverage to a temporary employee working full-time hours?
The answer depends on many factors. Specifically, the employer group’s size and the nature of the temporary employees’ work will determine if coverage must be offered.
A small employer (with fewer than 50 full-time employees, including equivalents) must carefully review its plan documents and insurance contract for the terms of eligibility. If they simply state that employees working a certain number of hours per week are eligible, a temporary employee satisfying the hour requirement would qualify and would need to be offered coverage. If the intention is to exclude temporary employees, the small employer should work with outside counsel to review its employment practices and draft appropriate plan language.
Under the ACA’s employer mandate, large employers with 50 or more full-time employees including equivalents must offer coverage to employees working 30 hours or more per week. The only exceptions are for variable hour employees whose hours fluctuate above and below 30 hours and seasonal employees. These two categories of employees may be measured in a look-back measurement period and offered coverage prospectively if they average full-time hours during the measurement period.
Part-time employees should also be measured and monitored. If any of the classified part-time employees are in fact averaging full-time hours, they should be offered minimum value, affordable medical coverage as are other full-time employees. If they are not offered such coverage, the employer is at risk for an employer mandate penalty if one of the employees goes to the exchange, purchases individual coverage, and receives a premium tax credit.
There is no exception under the employer mandate for non-seasonal temporary employees. If they are regularly working 30 hours or more per week for more than three months, they should be treated as any other full-time employee and offered minimum value, affordable coverage.
If the temporary employee is employed through a staffing agency, that adds another dimension. Temporary employees who work multiple assignments with varying lengths are generally the common law employee of the staffing agency. An employer would generally not need to offer such an employee coverage.
However, if the temporary employee is on a long-term assignment with the employer, the employee could still be considered the employer’s common law employee even if the employee receives a paycheck from the staffing agency. In this case, the employer would need to review its contract with the staffing agency to see if the staffing agency is going to offer coverage to the employee and include them in reporting on the employer’s behalf. If the staffing agency does not accept that responsibility, the employer will need to offer coverage if the employee is working full-time hours for the employer and include them in reporting.