Q. My client employs employees for eight to nine months each year. When they are employed, these employees work over thirty hours per week. When does my client have to offer these employees offer coverage if it is subject to the employer mandate?
A. Under Treasury Regulations Section 54.4980H-1(a)(38, the term “seasonal employee” means an employee who is hired into a position for which the customary annual employment is six months or less. The preamble clarifies that “customary” means that by the nature of the position an employee typically works for a period of six months or less, and that period should begin each calendar year in approximately the same part of the year, such as summer or winter. In certain unusual instances, the employee can still be considered a seasonal employee even if the seasonal employment is extended in a particular year beyond its customary duration (regardless of whether the customary duration is less than six months).
Since these employees work more than six months, they cannot considered a seasonal employee. Since they work more than thirty hours per week, they would not be considered a variable hour employee and the measurement period calculation cannot be applied to determine full-time status.
These employees would have to be eligible for the employer’s medical coverage after they complete the employer’s waiting period.
Treasury Regulations Section 54.9815-2708(d) provide that a former employee who is rehired may be treated as newly eligible for coverage upon rehire and, therefore, a plan or insurer may require that individual to meet the plan’s eligibility criteria and to satisfy the plan’s waiting period anew, if reasonable under the circumstances. For example, the termination and rehire cannot be a subterfuge to avoid compliance with the 90-day waiting period limitation. The same analysis would apply to an individual who moves to a job classification that is ineligible for coverage under the plan but then later moves back to an eligible job classification.
The above indicates that an employer could require these employees to complete a new waiting period each year when they return to employment with the employer.
Provided by Larry Grudzien, JD, LLM
Larry has 28 years of experience as an attorney, practicing exclusively in the field of employee benefits.