How Summer Hires May Impact ALE Status

Employers May Apply a Reasonable, Good Faith Interpretation of the Term 'Seasonal Worker'

Employers looking to hire seasonal workers this summer are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act's employer shared responsibility ("pay or play") provisions.

What Is 'Pay or Play'?
The pay or play provisions require ALEs—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax if any full-time employee is certified to receive a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange).

Seasonal Worker Exception
If an employer's workforce exceeds 50 full-time employees (including FTEs) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee
While the terms "seasonal worker" and "seasonal employee" are both used in the pay or play provisions, only the term "seasonal worker" is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term "seasonal worker." For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.

Health Care Reform Updates

 

Top 5 Open Enrollment Notices

Certain Notices Must Be Distributed Around Open Enrollment

A company's open enrollment period can be a hectic time for management, HR, and employees alike. However, during the enrollment process, employers should remember their disclosure obligations. Below are five key notices that must be distributed to employees around the open enrollment period:

1. Summary Plan Description (SPD): An SPD must generally be distributed to group health plan participants within 90 days after the employee becomes a plan participant. Click here for more on the SPD requirement.
2. Summary of Benefits and Coverage (SBC): An SBC must generally be provided to group health plan participants and beneficiaries prior to initial enrollment in, or upon renewal of, plan coverage. Click here to access an SBC template.
3. Employer CHIP Notice: The Employer CHIP Notice must be provided to all employees that reside in states with group health plan premium assistance, annually before the start of each plan year. Click here to download a model Employer CHIP Notice.
4. Notice of Special Enrollment Rights: This notice must be provided to all employees eligible to enroll in the employer's group health plan, at or before the time the employee is initially offered the opportunity to enroll. Click here to access a model Notice of Special Enrollment Rights (see page 3, also marked as page 138).
5. Medicare Part D Creditable or Non-Creditable Coverage Notice: This notice must generally be distributed before October 15 to all Medicare-eligible individuals who are offered prescription drug coverage under the employer's group health plan. Click here to access model versions of the creditable and non-creditable coverage notices.

Note: Additional notice requirements may apply depending on the particular features of the group health plan.

Top 5 Open Enrollment Notices

Health Care Reform Updates 2017