What You Need to Know: Hiring Interns & Other ACA Seasonal Employees
As summer approaches, one trend we start to see is hiring interns & other ACA seasonal employees. Under the Affordable Care Act (ACA) regulations, there are no special exceptions for paid interns. (There are exceptions for unpaid interns and students in positions subsidized through the federal work study program or a similar program.) Let’s review a few considerations when determining whether interns will be eligible for benefits.
The first step is to determine whether the intern is a seasonal or variable hour employee.
What are ACA seasonal employees?
Under the ACA, seasonal employees include those who generally begin work at the same time of year and their employment is no longer than 6 months. Examples include summer lifeguards and retail employees during the busy holiday months.
If you hire summer interns at the same time each year, it is a good sign they are seasonal employees. This is usually done because your company needs work completed during the summer or because of the employees’ availability. They are only seasonal employees if they do not work longer than 6 months.
What are variable hour employees?
Variable-hour employees have irregular weekly hours with no expectation of consistency. The expectation of full-time employees is to work 40 hours per week and part time employees to work 20 hours per week. For example, substitute teachers and per diem nurses both pick up jobs/shifts as they are available and may not work on any given day.
How are seasonal and variable hour employees treated?
If your interns fall into one of these two categories, the law allows you to place them into a measurement period for determining benefits eligibility. The company can do this instead of offering benefits after a short waiting period at the beginning of employment.
If your interns do not fall into these categories, then under ACA regulations they are likely considered regular, full-time or part-time employees (based on the expected number of hours to work upon hire). You should treat them as such, including offering benefits once a waiting period is complete.
Then you can determine how best to track your interns.
When can interns become eligible employees?
Internships are valuable relationships for employees and employers. They provide employees with entry-level positions they may have not otherwise been eligible or considered for. Internships provide employers the opportunity to assess employees’ skills and value to the company. At the end of an internship, it’s possible the employer could offer the intern a permanent job. If this happens, employers need to be cautious of those interns who were defined as seasonal or variable hour. Now that they are full-time regular employees, you must offer benefits after a waiting period and treat them as full time employees (FTEs).
Employers should be cautious of long-term interns who have stayed past their initial offer of short-term employment. They pose a potential risk of an Employer Shared Responsibility Payment (ESRP) assessment. Be aware when variable hour employees slip into a steady pattern of full-time work. In that situation, the employee may measure full-time across a full measurement period and be a potential ESRP assessment risk if you do not offer them coverage.
Tips when hiring interns & other ACA seasonal employees
- If interns qualify as seasonal or variable-hour employees, clearly define them and state this in their offer letters.
- Educate your management and HR teams about the rules with ACA seasonal employees. Ensure you share the expectation that interns, or other ACA seasonal employees, are only working short-term.
- Closely track the work and hours of interns. Remember a long-term substitute should not replace hiring regular employees.
- Measure your seasonal employees over a defined measurement period to know if they will become benefits-eligible if they remain employed. Tango’s eligibility tracking feature helps calculate hours, determine eligible employees, and identify those whose average hours are trending toward becoming eligible.
- If you decide to hire interns after they complete their internship, offer benefits as appropriate, and update their status in your ACA software.
Tango Health offers a comprehensive, end-to-end ACA reporting solution, and excels at helping complex organizations track their diverse workforce. From seasonal to part-time to variable hour employees, we pull all data sources together for more accurate reporting. Learn more about our ACA Solution.
Categorized in: ACA