The ACA and Seasonal Employees: What You Need to Know
This article was updated on Oct. 12, 2018.
The ACA and seasonal employees can be a difficult road to navigate to remain compliant. The ACA requires applicable large employers (ALEs) to offer health insurance to their full-time (30-plus hours per week) employees. Your organization is an ALE if you have 50 or more full-time equivalent (FTE) employees.
But there's an exception for a seasonal workforce. If your workforce includes 50 or more FTE workers for not more than 120 days per year (or four full calendar months, regardless of whether they're consecutive), and the workers in excess of 50 during that time period are seasonal workers, your organization is not considered an ALE, and is not subject to the ACA's employer mandate.
How Are Seasonal Employees Defined?
Employees are considered seasonal if the expected duration of their employment is six months or fewer, and if the job typically starts and ends at approximately the same time each year. There's some flexibility though; if a ski resort normally hires a seasonal workforce from November through March, their seasonal staff is still considered seasonal even in a year with particularly heavy spring snow that keeps the resort open — and the seasonal workers employed — through May.
What Is the Best Way to Determine Whether to Offer Coverage to Your Seasonal Employees?
If you use a look-back measurement period to determine whether your employees are full-time, you can opt to use an initial measurement period — between three and 12 months long — during which you keep track of new seasonal employees' hours worked in order to determine whether they'll be counted as a full-time employee during the following stability period (this is the same as the process for new variable-hour employees). While seasonal employees are in their initial measurement period, you don't have to offer them health insurance. So the normal requirement — to offer health insurance by the first day of the fourth month of employment — does not apply to seasonal employees, even if they're working 30+ hours per week during the season that they're employed.
However, incorrectly classifying new full-time employees as seasonal employees in order to use an initial measurement period can result in penalties. So although you might be planning to have a new employee work temporarily, if the employment duration is expected to be more than six months and at least 30 hours per week, you must comply with the normal rules regarding full-time workers; you cannot use a 12-month initial measurement period to avoid offering coverage by the first day of the fourth month of employment.
If you use an initial measurement period and have seasonal employees who do not work an average of at least 30 hours per week during the measurement period, they're not considered full-time under the ACA. So your organization would not have to issue Forms 1095-C for those seasonal employees.
If you use a monthly measurement method instead of a look-back measurement method, you'll need to offer coverage to seasonal employees who work at least 30 hours per week, but if you have a waiting period before benefits kick in, they may not be employed long enough for coverage to apply (note that whether you use a look-back measurement period or a monthly measurement period, you have to use the same method for all employees in the same category, regardless of whether they're seasonal or permanent).
What If You Rehire the Same People Each Year?
If you rehire the same seasonal employees annually, you can start a new initial measurement period for them each year, as long as there's a gap of at least 13 weeks (26 weeks if you're an educational organization) between the dates that they worked for you. So a golf course that hires the same 30 seasonal employees every year from May through September would be able to start a new 12-month measurement period for those seasonal employees each May.
There's a lot to understand about the ACA and seasonal employees. But in general, the law and subsequent regulations have provided significant flexibility for organizations that rely on a seasonal workforce for part of the year.
