Many resort and ski-town workers are employed for only part of the year. During the off-season, they take time off or find other jobs.
This guide helps Colorado employers provide affordable health benefits to seasonal and temporary employees and their families. It also ensures compliance with the Affordable Care Act, Fair Labor Standards Act, and Colorado labor laws.
As Colorado employers get geared up for ski season, let’s go over the rules.
Understanding Seasonal Employment in Colorado
In Colorado, a “seasonal” business is a business or occupation within a business that operates for fewer than 26 weeks in a calendar year.
Seasonal employers must have at least 45 consecutive days annually when employees are not working in seasonal roles. Additionally, no more than 25% of your employees, or employees in each seasonal occupation, can work outside the designated season.
If you fail either of these tests, your business will not qualify as a seasonal employer under Colorado state law.
What Is A Seasonal Worker?
Under the Affordable Care Act, a seasonal employee is hired for less than six months. They also work fewer than 30 hours weekly during the measurement period.
Similarly, under the Affordable Care Act, ALEs with 50 or more full-time equivalents must offer health insurance to eligible seasonal employees. Seasonal employees classified as full-time require qualified group health insurance to avoid potential penalties.
Tip: Keep detailed records of employee hours, as audits by labor officials ensure compliance with federal and state regulations.
FREE QUOTE
COLORADO HEALTH INSURANCE
Health Insurance Requirements for Seasonal Employees
Under the ACA, employers with at least 50 full-time employees or equivalents must provide qualified group health insurance.
This requirement applies to full-time employees working 30 or more hours per week. If a large employer fails to do so, they face potentially significant shared responsibility penalties under the ACA. But the ACA provides for some exceptions for small employers and for seasonal workers.
For example, the ACA’s general rule does not apply to smaller businesses with 49 full-time equivalents or fewer. Businesses with 50+ full-time equivalents are not required under the ACA to provide health insurance to temporary or seasonal workers.
The ACA Look-Back Period
The ACA’s look-back measurement method helps employers determine health insurance eligibility for variable-hour, temporary, and seasonal employees.
This method allows employers to track employee hours over a period of time to see if they meet the threshold for being considered full-time under the ACA, which is 30 hours per week or 130 hours per month on average.
Here’s how the ACA look-back rules work:
1. Standard Measurement Period
- What it is: This is a period of time, chosen by the employer (between 3 and 12 months), during which the employer tracks employee hours to determine whether they are averaging full-time hours.
- Purpose: It allows employers to assess whether employees, including variable-hour, temporary, and seasonal workers, meet the ACA definition of full-time.
- How it works: For example, if the employer chooses a 12-month measurement period and a temporary worker averages at least 30 hours per week during that time, the employee must be considered full-time for the purposes of health insurance benefits.
2. Administrative Period
- What it is: After the measurement period ends, the employer has a short period (up to 90 days) to determine who qualifies as full-time and make necessary arrangements to offer health insurance.
- Purpose: This allows the employer time to process the information and ensure that employees are offered health insurance coverage if they are deemed full-time.
- How it works: For example, after the 12-month standard measurement period, the employer has up to 90 days to enroll eligible employees in health insurance.
3. Stability Period
- What it is: This is the period following the measurement period and administrative period during which full-time employees are offered health insurance benefits. The stability period must be at least as long as the measurement period but no shorter than 6 months.
- Purpose: This guarantees that employees deemed full-time after the measurement period continue receiving benefits even if their hours drop below 30 hours per week during the stability period.
- How it works: If an employee was full-time during the 12-month measurement period, the employer must treat them as full-time and offer health insurance for the duration of the stability period, regardless of any subsequent changes in hours worked.
4. Variable-Hour, Temporary, and Seasonal Workers
- Variable-Hour Workers: Employees whose hours fluctuate or are difficult to predict fall under the look-back rule. If, during the measurement period, their average hours worked meet the 30-hour per week threshold, they are treated as full-time for the stability period.
- Temporary Workers: Temporary workers who are hired with fluctuating or unknown hours can also have their status evaluated using the look-back method. If the worker averages 30 or more hours per week during the measurement period, they must be treated as full-time during the stability period.
- Seasonal Workers: The ACA defines seasonal workers as those who work six months or less per year and whose employment typically recurs at the same time each year. Employers are allowed to use the look-back method to determine if these workers should be considered full-time. If, during the measurement period, the seasonal worker averages fewer than 30 hours per week, they are not required to be offered health insurance during the stability period.
Key Points to Remember
- Full-Time Status Definition: Under the ACA, a full-time employee is one who works 30 or more hours per week or 130 hours per month on average.
- Flexibility for Employers: The look-back method gives employers flexibility in determining who should be considered full-time, rather than requiring an immediate determination based on fluctuating work schedules.
- Seasonal Worker Exemption: Seasonal workers who work fewer than six months do not need to be offered insurance coverage immediately, and their status can be assessed over the look-back period.
- Penalty Avoidance: Employers subject to the ACA’s employer mandate must offer health insurance to all full-time employees or potentially face penalties. Using the look-back period ensures they do not mistakenly exclude eligible workers.
The look-back method helps employers manage health insurance obligations effectively. It ensures proper classification of temporary, variable-hour, and seasonal workers under ACA rules.
Returning Seasonal Employees
The ACA allows large employers to begin a new initial measurement period for returning seasonal employees each year.
But there must be a minimum gap of 13 weeks between employment stints (26 weeks for educational organizations). You cannot lay off employees briefly to restart the clock and deny them health benefits under the ACA rules.
It’s advisable to start a new 12-month measurement period on the first day of seasonal employment each year.
Again, this provision does not apply to smaller companies with 49 full-time workers or fewer.
Health Coverage Options for Seasonal Workers
While providing health insurance for seasonal employees can be expensive, there are several options to consider:
1. Health Sharing Plans
Health Sharing Arrangements are an alternative to traditional health insurance that can benefit seasonal workers.
These plans allow like-minded individuals to share medical expenses, typically costing about half as much as traditional group plans. Members contribute monthly fees, which are then distributed to cover medical treatments when needed.
While Health Sharing Arrangements can offer significant cost savings for seasonal workers, it’s important to note that they are not insurance and do not provide subsidies like traditional plans. These arrangements may have limitations, such as waiting periods for pre-existing conditions, but can be a more affordable option for those who don’t qualify for substantial health insurance subsidies.
2. Health Savings Accounts (HSAs)
An HSA (Health Savings Account) is a tax-advantaged savings account designed to help individuals with high-deductible health plans cover medical expenses.
For seasonal workers, an HSA can be particularly beneficial as it allows them to set aside pre-tax dollars for healthcare costs, even during periods of unemployment. The funds in an HSA roll over from year to year, providing a safety net for medical expenses between seasonal jobs.
Additionally, seasonal employees can contribute to their HSA whenever they have income, allowing them to build up savings during their working periods to cover healthcare costs during off-seasons.
3. Individual Coverage Health Reimbursement Arrangements (ICHRAs)
Individual Coverage Health Reimbursement Arrangements (ICHRAs) can be particularly beneficial for seasonal workers.
As a seasonal employee, you may be eligible for an ICHRA offered by your employer, which allows them to reimburse you for health insurance premiums and other qualified medical expenses. This arrangement provides you with the flexibility to choose and purchase your own individual health insurance plan through the marketplace, tailored to your specific needs.
ICHRAs can offer valuable health coverage protection during your employment period while potentially saving money for both you and your employer.
What Happens When Seasonal Employment Ends?
When seasonal employees leave, they have several options:
1. Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA allows employees to continue their employer-sponsored health coverage for a limited time after leaving their job. However, it can be expensive, especially for lower-wage seasonal workers. COBRA coverage is costly, often making it hard for workers to maintain health insurance after their employment ends.
Learn More: What To Do If You Can’t Afford COBRA Coverage
2. ACA Marketplace Plans
Lower-wage workers can use the special enrollment period after leaving an employer to enroll in an ACA marketplace plan. This option often comes with subsidies that make coverage more affordable than COBRA.
Employers can help seasonal workers by guiding them on special enrollment periods and exploring marketplace health insurance options.
Avoid Misclassification
Employers must take care not to misclassify non-seasonal employees as seasonal just to avoid health insurance requirements.
The IRS and Department of Labor audit for compliance, and misclassifying employees to avoid health insurance can result in fines. Proper classification is essential for compliance and avoiding potential penalties.
Short-Term Health Insurance: Not an Option in Colorado
While short-term health insurance products are a common solution for seasonal workers in other states, Colorado has banned these plans.
Short-term health insurance plans offering temporary coverage for up to 12 months are not allowed in the state. They often lack comprehensive benefits and fail to meet Affordable Care Act standards.
This limitation makes it even more important for Colorado employers to explore other ways to help their seasonal workforce.
Why You Should Provide Health Benefits for Seasonal Workers (Even If You Don’t Have To)
While not always required by law, offering some form of health coverage to seasonal employees can have several benefits for your business:
- Attracting and Retaining Talent: In a competitive job market, offering health benefits can set your business apart and help attract high-quality seasonal workers.
- Improved Employee Health and Productivity: Workers with access to health care are likely to be healthier and more productive on the job.
- Enhanced Company Reputation: Providing health benefits demonstrates that you care about your employees’ well-being, which can boost your company’s reputation among workers and customers alike.
- Potential Tax Benefits: Depending on the type of health coverage offered, your business may be eligible for tax deductions or credits.
Educating Your Seasonal Workforce
Many seasonal workers may not be familiar with their health insurance options or rights.
As an employer, you can play a crucial role in educating your workforce about:
- Their eligibility for employer-sponsored coverage
- The ACA marketplace and special enrollment periods
- The benefits of health savings accounts (HSAs)
- How to navigate health insurance options when their seasonal employment ends
Providing this information can help your employees make informed decisions about their health care, even after they leave your employment.
Tip: You don’t have to do this by yourself. Contact a ColoHealth Personal Benefits Manager who will be happy to help enroll your full-time, part-time, and seasonal employees into your health plan as a ColoHealth client.
If you choose not to provide health benefits directly, your ColoHealth Personal Benefits Manager can help them find a health insurance or health sharing plan within their needs and budget.
This service is free to you. Insurance and health sharing organizations pay our fees when we help employees sign up for coverage through their plans.
We can also help you with your health plan and benefits design from the ground up. This ensures you offer the best benefits within your budget to support your employees and their families in need.
Schedule a Consultation With A ColoHealth Personal Benefits Manager
FREE QUOTE
COLORADO COST-SHARING
Seasonal Employee Health Insurance Conclusion
Health insurance rules for seasonal employees in Colorado are complex and can be costly if mishandled.
Employers must balance ACA requirements with financial considerations. Seeking professional advice is crucial for compliance and protecting business interests.
A ColoHealth Personal Benefits Manager can provide tailored guidance and help explore cost-effective options like health sharing arrangements or ICHRAs.
Offering health coverage for seasonal employees is an investment in your workforce and business reputation. By understanding your obligations, exploring suitable options, and educating workers, you can protect your seasonal staff while complying with regulations and supporting your business’s success.
Make a free appointment with an Expert ColoHealth Personal Benefits Manager today!
For Further Reading:
Leslie Alford is a Personal Benefits Manager at ColoHealth. Her aim is to help you make smart and informed healthcare coverage decisions that will fit your needs and budget. Read more about Leslie on her Bio page.
