Ever since the final rules on the employer mandate were published back on February 12th, brokers have been able to provide better advice to their large group clients. Finally, we have some answers…
One question that a lot of large employers waiting for clarification on is “how do we count seasonal employees?” This question is answered in the final rules.
The language from the final regulations can be found below, but basically, employers are required to count their seasonal employees when determining if the group is subject to the shared responsibility requirements, but there is no requirement to cover seasonal workers and no penalty for companies that don’t. Additionally, if a company is normally classified as a small employer (fewer than 50 FTEs) but exceeds the 50 mark for 120 days a year or less only because of its seasonal workers, it’s still considered a small group and will not be required to offer coverage.
The final rules also give us some clarification on the definition of a seasonal employee, which can be found in the first paragraph below. Here’s what the final regulations say about seasonal workers:
C. Seasonal Workers
Section 4980H(c)(2)(B) provides that an employer is not considered to employ more than 50 full-time employees if (1) the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and (2) the employees in excess of 50 employed during such 120-day period are seasonal workers. For this purpose, the proposed regulations define the term seasonal worker as a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons. The proposed regulations further provide that employers may apply a reasonable, good faith interpretation of the term seasonal worker and a reasonable good faith interpretation of 29 CFR 500.20(s)(1) (including as applied by analogy to workers and employment positions not otherwise covered under 29 CFR 500.20(s)(1)).
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Commenters requested that other employees with seasonal employment who are not excluded under the seasonal worker exception nonetheless be excluded for purposes of determining applicable large employer status. However, given the specific statutory reference to seasonal workers as part of a more limited exception, there is no statutory authority for such a broad exclusion. Accordingly, the final regulations adopt the provisions of the proposed regulations with certain clarifications in response to comments.
With respect to the reference to retail workers employed exclusively during the holiday seasons, commenters requested clarification of the specific events or periods of time that would be treated as holiday seasons. The final regulations do not indicate specific holidays or the length of any holiday season for this purpose, as these will differ for different employers. Retail workers employed exclusively during holiday seasons often are seasonal workers and therefore are generally excludible on that basis, if the employer otherwise meets the conditions of the seasonal worker exception.
The proposed regulations apply the seasonal worker exception set forth in section 4980H(c)(2) based on the prior calendar year. One commenter requested that the seasonal worker exception apply to new employers. The final regulations adopt this suggestion, so that in the case of an employer that was not in existence on any business day during the preceding calendar year, the seasonal worker exception applies so that the employer will not be treated as an applicable large employer if it reasonably expects (1) its workforce to exceed 50 full-time employees (including FTEs) for 120 days or fewer during the current calendar year, and (2)the employees in excess of 50 employed during such 120-day period to be seasonal workers.
How can brokers benefit from these regulations?
Anything that employers are confused about creates an opportunity for insurance agents. Those who are educated about the regulations can provide clarification and peace of mind for employers by helping them understand what a seasonal worker is and letting them know that there is no obligation to cover seasonal workers.
Additionally, agents who have a private exchange site can work with the employer to help these seasonal employees get health insurance coverage in the individual market and apply for a premium tax credit to help them pay for it.
A lot of companies employee workers on a seasonal basis, and the fact that these workers don’t have to be offered group health coverage creates a huge referral opportunity for agents.