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Eligibility and effective dates

Coverage eligibility under the Affordable Care Act

The Affordable Care Act introduced rules that could affect your employees’ eligibility for health care and when you need to offer it

Applicable Large Employers

The ACA mandates that applicable large employers offer health insurance for full-time employees and their dependent children up to age 26. An applicable large employers is a business that employed at least 50 full-time or full-time equivalent employees on business days during the preceding calendar year.

Find out if your business is an applicable large employer.

Employee coverage effective dates

Individuals must have health care coverage that meets the ACA’s minimum value and affordability requirements for each month of the year, or the employer will face a tax penalty.

Health care coverage for employees of applicable large employers in 2017 must meet these requirements:

  • Affordability: The cost for the employee’s coverage must not exceed 9.5 percent of their total household income (use the employee’s pay rate to determine this percentage).
  • Coverage percentage: 95 percent of full-time or full-time equivalent employees must be provided health insurance to avoid a tax penalty, up from 70 percent in 2015.
  • Minimum value: The percentage of costs the health plan must cover is 60 percent.

How the ACA defines employee status

It’s important to understand how the ACA defines employee status to ensure your business complies with the law:

Full-time employees

A full-time employee is “reasonably expected to work at least 30 hours per week.” (PDF) These employees are entitled to employer-provided health insurance.

Variable hour or seasonal employees

If your business employs variable hour or seasonal employees, you must offer health care coverage if they average 30 hours per week or more.

  • Variable hour employees have current hours that are uncertain, or you cannot otherwise determine whether they’re considered full time.
  • Seasonal employees have an annual employment of six months or less.

Look back over a period of six to 12 months and average the employee’s work hours over that time to evaluate their coverage eligibility.

Once you’ve determined whether the employee is eligible or ineligible for coverage, that status is locked in for the same length of time as the measurement period for the previous year. Changes to the employee’s work hours over this period do not change their eligibility status over the current period, though they will affect the next measurement period.

Depending on how long you set measurement periods, employees could become eligible for coverage at different times during the plan year and after the maximum 90-day new-hire waiting period.

Temporary employees

Temporary employees (also called short-term employees) are expected to work less than one year at the time of hiring. If they work more than 30 hours per week and are not considered a seasonal or variable hour employee, they are eligible to receive health insurance coverage.

Use our guide to determine how many of your employees are eligible for insurance.

We break down Affordable Care Act requirements so you don't have to

Learn more about the ACA

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