Thursday, September 20, 2012


IRS Notice 2012-58  is aimed at employers with more than 50 full-time employees and solidifies how employers are to determine whether an employee is full-time or part-time.  A full-time employee, for health reform purposes, is defined as someone who works, on average, 30 hours or more per week.  This number is important for several reasons but mainly if you should be offering them health coverage and if they could count against you if you are penalized for either not offering minimal essential coverage or if your health plan is deemed unaffordable.

Often-times employers will bring employees on board as a part-time employee and through shift changes or picking up hours here and there become full-time but still labeled part-time.  The IRS is going to be looking at these employees very closely as to whether they should have been considered full-time.  The way they are going to do this is specified in the link above but a synopsis is located below:

Ongoing Employees (Safe Harbor)

1) For ongoing employees (employees who have been working for at least one standard measurement period), employers "Look-Back" over a period of "Standard Measurement" of at least 3 months but no more than 12 Calendar months to determine average weekly hours.

2)  Those employees who average more than 30 hours during this "Standard Measurement Period" or "Look-Back Period" are considered full-time.  Employers may take an (Optional) "Administrative Period" of no longer than 90 Days to bring them into full-time benefits.

3) Following the Look-Back Period", starts the "Stability Period" which is at least 6 months long and no shorter than the "Standard Measurement Period".  During the stability period the employee remains either Part-Time or Full-Time based on their determination, even though they may have moved back into Part-Time or Full-Time status.

Newly Hired Employees, Variable and Seasonal (Safe Harbor)

1) Similar to ongoing employees, Employers may use an initial "Measurement Period" of at least 3 months but no more than 12 months to determine average hours, and an (Optional) administrative period of no more than 90 days to bring that employee on board as full-time eligible if they meet the Full-Time criteria.

2) The "Stability Period" must be the same length as the "Stability Period" for ongoing employees.

3) The rules for the "Stability Period" are the same for Newly Hired and Ongoing Employees.

This requirement under health reform appears to be aimed at those 50+ employers who are thinking that they may be able to avoid penalties associated with not offering minimal essential coverage or unaffordable coverage by hiring more part-time employees.  The fed needs their penalty income to pay for health reform so one way or another they will get it.  Unless you plan on bringing a part-time employee on full-time, keep them under 30 hours per week to avoid any potential fines.