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Health Care Reform: How has the Patient Protection and Affordable Care Act (PPACA) affected employers that use part-time employees?

   3/6/2015
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The PPACA has affected employers that use part-time employees in several ways. The most significant is the Act’s definition of full-time employees that results in how employers define part-time workers with respect to eligibility for health coverage. The PPACA considers employees who work 30 hours or more to be full-time employees.  Beginning January 1, 2015, under the employer shared responsibilities of the PPACA, all employees working an average of 30 hours per week or more in a month for an applicable large employer (ALE) must be eligible for affordable coverage or the employer may be subject to a penalty. (An ALE is an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year.) Some employers have traditionally defined part-time employees as those working less than 40 or 35 hours a week and have not offered those employees health care coverage. In light of the PPACA’s requirements, employers may wish to revise their definition of part-time employment or expand health care coverage eligibility. 

Also, the number of part-time employees must be taken into account when determining whether the employer meets the threshold number of employing at least 50 full-time employees or 50 full-time equivalents (FTEs). Employers that are on the borderline of the 50 FTE size will want to monitor the hours of part-time employees very carefully and regularly to ensure these employees do not affect the threshold number.  

The PPACA’s requirement for employers to offer health care coverage to employees working 30 or more hours per week to avoid penalties may result in some employers hiring more part-time employees who work less than 30 hours per week. This is because there are no penalties under the PPACA for not offering health insurance to part-time employees, even if coverage is offered for full-time employees. Also, while full-time employees who go to a state health insurance exchange to purchase coverage will trigger a penalty for a large employer, the same is not true for part-time employees who seek coverage through the exchanges. 

Employers will need to weigh the pros and cons of having a staff that is more heavily made up of part-time employees. Some of these considerations, such as a company’s culture and employees’ sense of commitment, are not as easily identifiable as the cost of premiums.

 

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This material is for informational purposes only and not for the purpose of providing legal advice. You should always contact your attorney to determine if this information, and your interpretation of it, is appropriate to your particular situation.

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