Does your organization employ temporary employees who are not employed through a staffing agency or who are not true independent contractors? If so, you have some work to do. Under the Affordable Care Act (ACA), the temporary employee classification does not exist. This article covers the four categories of employees that the ACA does recognize and how to reclassify your temporary employees.

1. Step 2: Run reporting that displays their hours worked per month
over the past 12 months. Flag any employees who averaged 30
hours during the total time period or within the first six or last six
months. Flag any temporary employees who worked 130 hours
or more in any given month. These flagged employees could be
considered full-time under ACA.
Step 3: Categorize your temporary employees into the four
available ACA classifications and evaluate the impact of these
changes. See the graphic below for the classification breakdown.
Step 4: Based on your policy decisions, amend your handbook,
policies and health-plan documents, including insurance
contracts, and communicate these changes to employees.
Step 5: When hiring new employees, ensure they are placed in
one of these four categories and administered accordingly.
Take caution in your reclassification efforts, and please
note that there may be other legal implications to your current
temporary employee definition and administration.
Portions reprinted with permission. Copyright ASAE: The Center for Association
Leadership, April 2013, Washington, DC.
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D
oes your organization employ temporary employees who
are not employed through a staffing agency or who are
not true independent contractors? If so, you have some
work to do. Under the Affordable Care Act (ACA), the temporary
employee classification does not exist. The ACA recognizes only
four categories of employees:
1. Full-time (30 hours per week or 130 hours in any given
month)
2. Seasonal
3. Variable Hour (hourly employees who may work more or less
than 30 hours per week)
4. Part-Time (always working less than 130 hours per month)
Why is this reclassification important? Beginning in 2015, if
an employer with 50 or more full-time employees or equivalents
does not offer health insurance benefits to 95 percent or more
of its full-time employees and at least one full-time employee
goes to an exchange and qualifies for premium assistance, then
the employer’s annual penalty could be $2,000 per all full-time
employees less the first 30 full-time employees. Thus, this penalty
could be triggered if any of your temporary employees will be
considered full-time.
If your organization has temporary employees, follow these
five steps to identify and reclassify these employees to eliminate
the risk that they will trigger the $2,000-per-employee penalty.
Step 1: Identify your current temporary, non-benefit-eligible
employees, such as interns, seasonal hires and temporary
workers, who supplement your workforce or assist in the
completion of a project.
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The Temporary Employee Classification… Gone with the ACA Wind
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FULL-TIME: Extending health plan eligibility to temporary
employees who are reclassified as full-time will prevent these
employees from triggering the $2,000 penalty. Calculate their
projected enrollment and impact to your budget. Is this cost
increase acceptable? If not, can you make compliant policy
changes to reclassify these employees as part-time? For
example, can you compliantly limit their monthly hours to 125?
SEASONAL: Seasonal employees can be excluded from your
group health plan. The final ACA definition of seasonal is
pending. For planning purposes, consider employees with strong
seasonality and employment durations of less than 121 days
as seasonal. For example, if you hire interns only in the summer
and for 90 days or less, they will likely be classified as seasonal.
However, if you hire interns throughout the year, the position is
not dependent on seasonality. Any seasonal employees should
be tracked similarly to variable hour employees.
VARIABLE HOUR: For hourly employees who may or may not
work 30 hours per week, you can track their hours for up to 12
months before establishing their eligibility.
PART-TIME: If you are able to classify temporary employees as
part-time (never working 130 hours or more in a given month),
these employees will not impact the $2,000 “no coverage”
2015 employer penalty.
THE FOUR ACA EMPLOYEE CLASSIFICATION CATEGORIES
ZACK PACE
CBIZ, Inc. • Columbia, MD
443.259.3240 • zpace@cbiz.com
CO-AUTHOR: Rebecca Barnes-Hogg of YOLO Insights