​What are the minimum amount of hours employees have to work to be eligible for health benefits?

What are the minimum amount of hours employees have to work to be eligible for health benefits?

January, 2016 has created a ripple of different questions and opinions on the future of health care. With the implementation of The Affordable Care act, policies are in full effect! One of the biggest questions that we get asked are about the minimum amount of hours employees have to work in order to he eligible for health benefits. There is some uncertainty on this topic, but going over the basics will give you a better overall picture for you as an employee and as an employer.

As per the guidelines of the Affordable Care Act (ACA), the benefits are required to be offered to any Full Time Equivalent employees (FTE) only, when the business employs more than 50 people as full time employee. ACA defines an FTE as any employee who works for at least 30 hours or more for the business in a week OR a minimum of 130 hours in a month. Also, at the same time, they will have to work for more than 120 days in a year for the same employer to be eligible for this benefit.

Any part time workers, who put in less than the above hours in a week or month or work for less than 120 days of a year for the employer, may not be eligible for the mandatory health care benefits from their employers.

As per the mandate, every full-time employee should count as 1 full-time employee and each 30 hours worked by any non-full-time workers are to be considered as equal to 1 full-time equivalent employee. The employer must add both these full-time and full-time equivalent workers to find out the exact number of employees to be considered effective under the mandate.

But, the calculation of total hours worked by an FTE can be handled in different ways, resulting in different outputs finally. These methods are as below:

  • Actual Hours: An employer can determine the actual hours of service by provided by the employee from records of hours worked and also the hours for which any payment is made or due. This includes hours of paid leave.
  • Days-worked equivalency: To use a days-worked equivalency method, an employer credits the employee with 8 hours of service for every day that the employee is eligible to be credited with at least 1 hour of service. This includes hours of paid leave.
  • Weeks-worked equivalency:  To use a weeks-worked equivalency method, an employer credits the employee with 40 hours of service for every week for which a payment is made or due. This includes hours of paid leave.

Thus, the total number of hours an employee worked will change in each of the 3 methods described above.

There are a few exception pointers to note in this whole scenario, and they are listed as below:

  • Employees of a business that employs less than 50 people are not guaranteed any health care benefit from their employer, as the business is not required by ACA to provide the benefits to the employees.
  • Even for the companies with more than 50 FTEs, the employers are required to provide coverage to total 95% of employees. Hence, they definitely can decide to make exceptions for the rest 5%. That means those 5% employees may never be offered the health care benefits sponsored by the employer, irrespective of the number of hours they put in to the job.
  • The employers are to use initial measurement periods for newly hired employees and a look-back period of 3 – 12 months for existing employees to determine if they need to comply with the employers’ mandate of ACA or if an employee is to be considered as full-time. 
  • Businesses that operate from multiple small, widely spread facilities over a vast geographical area are also exempt from the law to provide mandatory health care benefits to its employees, irrespective of the hours they have worked there.