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A Better Partnership


Oct 2012
October 03, 2012

Who’s Considered Full Time under Health Care Reform?

Starting in 2014, large employers (those with more than 50 full-time equivalent employees) will face penalties if they fail to offer health plan coverage to all full-time employees, which includes all employees who are scheduled to work 30 hours or more per week on average. The penalties can be harsh: if you fail to offer health plan benefits to even one such full-time employee, you will have to pay a per-employee penalty of $2,000 based on the total number of your full-time employees.

You Must Identify Full-Time Employees During 2013

You cannot wait until 2014 to identify your full-time employees. Rather, you must implement a program in 2013 to identify them and make sure they are offered coverage during your 2013 open enrollment period for the 2014 plan year. If your health plan does not operate on a calendar year, you must make sure that newly eligible individuals are covered under your plan by January 1, 2014. That may mean making them eligible at the beginning of the plan year that starts in 2013, or having a special enrollment period in late 2013. This may require coordination with your insurer or your third-party administrator and stop-loss carrier, and it’s a conversation you should have during early planning stages.

Safe Harbor for Full-Time, Part-Time, Variable-Hour and Seasonal Employees

For employees who work a set schedule, week in and week out, it may be fairly easy for you to determine who should be treated as a full-time employee. Some employees, however, work variable schedules and may not be easy to classify. This may include part-time employees who regularly cover for full-time employees when they are on vacation or on leave, or employees whose schedules vary with production or other demands. You may also employ seasonal workers who work full-time for a short period of time but are not expected to be full-time employees year round. For these variable-hour workers, you will have to establish a fair and uniform method of determining whether they average 30 or more hours per week.

The IRS has released Notice 2012-58, which establishes a safe harbor procedure to help you determine who is a full-time employee. The safe harbor method allows you to establish initial measurement periods for new employees and standard measurement periods for on-going employees. It also sets rules for providing coverage during “stability” periods associated with the measurement periods. Because you can adopt measurement periods as long as 12 months, measurement may already start in the fall of 2012. While you are not required to follow the safe harbor rule set forth in the Notice, it may give you peace of mind knowing that your process for identifying who must be covered will be deemed fair. The safe harbor rule is in effect through at least 2014, but may be modified thereafter.

Questions remain for temps, short-term assignment employees and high-turnover positions

Not squarely addressed in the Notice are other categories of employees who may raise thorny issues for employers. For example, if you have employees obtained through a temporary staffing agency, they may be considered your common-law employees and thus taken into account when determining whether you are subject to the play-or-pay penalties under Health Care Reform. Similar issues may arise with short-term assignment employees and employees hired into high-turnover positions. It’s unclear at this point whether these employees, when first joining your workforce, could be subject to an initial measurement period, especially if they are expected to regularly work at least 30 hours per week. The IRS is still looking at this issue and may provide further guidance.

If you need help setting up procedures to identify full-time employees, please contact Norbert F. Kugele (616.752.2186 or, April A. Goff (616.752.2154 or or any other member of Warner Norcross & Judd’s Employee Benefits/Executive Compensation Practice Group.

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