California health insurance - California Group health insurance - Part Time Employees and Group Health Eligibility
Your Guide to Part Time Employees and California Health Insurance
There is a great deal of confusion these days regarding part time employees and health insurance.
It's coming up in more conversations and for good reason.
What are the rules for health insurance when it comes to part time employees?
It's a good time to answer them since the rules are changing.
And the changes might mean money out of your pocket.
Many employers are unaware of the new changes created about the ACA law in regards to part timers.
We're a small company. That doesn't affect us!"
"We're a small company. That doesn't affect us!" Wrong.
Due to the ACA law, some calculations now look at your part time employees, others do not, and some are so complicated, we're not even sure how they apply.
Let's focus on what we do know to make sure you're protected and that your part time employees have health insurance options.
First, what is a part-timer in California
A part time employee is an employee that works under 30 hours a week.
Generally part-time eligibility starts at 15 hours/week but some carriers have more flexible bottoms (lower).
The complicated calculation mentioned above has to do with 30 hours during what time frame.
Last quarter? Past year? Right now?
There are dozens of pages that deal with this calculation and our recommendation is to offer your best estimate. We know...not very scientific but there are actually multiple ways to run it.
Carriers will have different requirements but as a rule of thumb, it's based on hours worked for 1/2 of prior calendar quarter.
Let's assume we have our employees that are clearly under 30 hours per week on average.
These are w2 employees, not contract or 1099 labor. Contractors or 1099
do not figure into any calculation due to their status.
An employer is not responsible for offering health insurance to these 1099 individuals.
That being said, be careful of the new penalties for employers paying towards individual plans!
That penalty was all the rage July of 2015. How quickly things change...
The new QSEHRA from Employers
A recent law created the new QSEHRA (Qualified Small Employer HRA) which allows eligible employer to pay towards an employee's individual/family health plan and deduct it.
We can help you investigate whether this option might work for you with part-time and full-time employees.
The issue has been that Covered Ca tax credits are not applicable with a QSEHRA and part-timers are probably eligible for tax credits!
Just call us at 800-320-6269 or email us and we run through the new law based on your needs.
You can always quote either individual or group health plans here:
On to our part-timers.
What are the rules for offering health insurance to part-timers
There are two important considerations.
Officially, a company is not required to offer health insurance to part time employees even if they offer it to full time employees.
You can find more information on whether a company has to offer health insurance to employees here but..
A company can CHOOSE to offer part-timers health insurance. In this case, the benefits and contribution must be the same as offered to full time employees.
If there is a waiting period for being eligible for benefits, the move from part time to full time eligibility (if part timers are not covered) is when the waiting period starts for benefits. Not the original hire date.
Quick note: There are now penalties for not offering health insurance to full-time employees down to 50 employees starting Jan 2016.
More detail here but in a nutshell:
- If company offers no health insurance, penalty is $2000/employee after 1st 30 eligible employees
We can help you evaluate these different strategies to see what is priced best at 800-320-6269.
So, the penalties do not apply to part-timers. How do part-timers fit into the equation??
The law DOES include the part-time employees to calculate the total # of employees.
This is used to determine if a company is in the penalty range.
For example:
Let's say we have a company with 40 full time (30 hours) employees and 100 part time employees at 15 hours.
The company might think, "Great...I have no penalty either way!"
Wrong.
The law looks at Full-time equivalents.
That's a fancy way of saying that the 100 part time employees are the EQUIVALENT of 50 full time employees.
Basically, a company looks at the total employed hours during a week and divides by 30.
That's your equivalent full-time number.
If it's 50 or more, you may be facing a penalty for not offering employer sponsored health insurance.
We were discussing these new penalties with a company and the owner said,
"I'll just wait till December and then drop payroll below 50 employees or drop hours down to part time"
That won't work. The look back period is generally the preceding year. The baseline employment is already in place for the most part.
What can Employer do for Part Timer Health Insurance
It's pretty black and white. Careful - many companies are swimming in sea of gray.
An employer can either offer part timer employees group health coverage on par with full-time employees or NOT.
Be sure not to contribute towards individual/family plans that the employee gets on their own without the new qsehra mentioned above!
This is equally true for full time employees!!
The irs and dol came out with clarification of huge penalties for contributing towards employee's individual plans even through fsa's, hra's, and the like.
Penalty of $100 per employee per day! Up to $36K per employee annually.
They're not messing around.
An employer should have nothing to do with an individual/family plan for their part timers unless it's processed through the QSEHRA which we can help you set up.
Don't even say "This amount is for you to get your own health plan".
What can part time employees do for coverage
Part timers that are not offered group health plans can get their own individual/family plans and we can help them through that entire process.
In 5 minutes we can size up tax credits, rates, and plans suited their needs and budget.
Our services are free. Please forward them to us and we'll help them. 800-320-6269
Make sure to keep an arm's length distance from their health insurance options and associated cost.
There are tax credits available to individuals and families now.
You can look at group coverage for them as well and we can also quote that along with your full time employees. quote request below.
We need at least 1 person on payroll who is not the owner and/or spouse. this one person can even be part-time.
What about dropping full-time employees to part-time to avoid the penalty
This has been in the news quite a bit with large companies dropping hours down to part-time status.
Again, the penalty may not apply to your part time employees but total payroll hours/30 per week will still factor into whether penalties apply to your full timers.
50 or more full time equivalents since Jan 1st, 2014 = potential penalty
Keep in mind that the lookback period may already be established for your next filing (following april) in terms of part-time status and total employee hours/week.
We can help you look at your particular situation to see what the most cost effective option is available including:
- Estimate of penalty based on current set-up
- Estimate of group health coverage versus penalty
- estimate of penalty if offering mec plan
Current trend for part-time employment
- We're seeing many employers not offer part-time coverage.
- Some employers are moving some full-time employees to part-time
- Some companies are reducing employment to below 50 cap (if they're close to cap)
- Many employers we come across are still paying towards employees Covered Ca health plans not realizing that they are accruing a significant penalty right NOW!
This is probably the biggest issue since the tax filing might result in $1000's in penalties.
If you do not want to offer part-time (or full time employees) employer sponsored health benefits, send them to us.
We'll get them the best plan, rate, and tax credit available on the market.
Link for Covered Ca quote his here:
For more complicated questions on full-time to part-time, dropping hours or employee count, this gets a little trickier.
Call us and we'll walk through the options. Our services are free to you.
For employees that make very little, we can also investigate whether they might qualify for a tax credit through Covered California.
Contact us at 800-320-6269 to go over the options available to you.
Related Pages:
Small Business Health Quote With Tax Credit Calculations
Individual Family Plans for Employees without Group Health Plan Quote
Again, there is absolutely no cost to you for our services. Call 800-320-6269 Today!