As a business owner or HR manager, you've probably found yourself caught between wanting to provide comprehensive benefits and worrying about the costs and complexities involved. Maybe you're losing great talent to competitors who offer better perks, or perhaps you're simply trying to do right by your team.

We get it. The world of part-time employee benefits can feel like a maze of regulations, costs, and strategic decisions. But offering health insurance to your part-time staff doesn't have to be a headache.

In this guide, we're cutting through the confusion to bring you the 10 essential things you need to know about offering insurance to your part-time employees because there's no simple yes or no answer.

Who qualifies as a part-time employee?

Before diving into health insurance rules, it's crucial to establish what constitutes "part-time" work. A part-time employee is typically someone that works fewer hours than a full-time employee. But, there's no universal definition.

The Fair Labor Standards Act (FLSA) doesn't define part-time employment, leaving it up to employers to determine. However, the Bureau of Labor Statistics considers workers who put in fewer than 35 hours per week as part-time. Many companies set their own thresholds, often between 20 to 29 hours per week. Some businesses might classify employees working 30 hours or more as full-time to align with the Affordable Care Act's requirements.

It's important to note that part-time status isn't just about hours worked. Other factors can include:

1. Weekly hours worked
2. Regularity of schedule
3. Job responsibilities
4. Eligibility for benefits
5. Industry standards
6. Company policies and culture

For startups and agencies hiring internationally, it's essential to recognize that the concept of part-time work can vary significantly between countries. Some nations have strict legal definitions of part-time employment, while others may be more flexible. For example:

• In the European Union, the Part-Time Workers Directive defines part-time workers as those whose normal hours of work are less than comparable full-time workers.
• In Japan, part-time workers are often referred to as "non-regular" employees and may work similar hours to full-time staff but with different contract terms.
• Australia defines part-time employees as those who work less than 38 hours per week and have reasonably predictable hours.

10 Things to Know About Offering Insurance to Your Part-Time Employees

Health insurance is a valued benefit that can help attract and retain talented folks working part-time with you. However, offering insurance to part-time staff involves navigating regulations, costs, and strategic decisions.

Before you decide whether to offer health insurance to your part-time employees, it's crucial to understand the rules, implications, and best practices. This guide will walk you through ten essential aspects — from legal requirements to strategic considerations — to know about offering insurance to your part-time employees:

Employer Discretion in Offering Coverage

The primary rule regarding health insurance for part-time employees is that it's largely at the employer's discretion. Federal law does not mandate that employers offer health insurance to part-time workers. This gives businesses significant flexibility in deciding whether and how to extend health coverage to their part-time staff.

However, while employers have this discretion, there are several important considerations and rules they need to keep in mind when making decisions about health insurance for part-time employees.

Compliance with the Affordable Care Act (ACA)

The Affordable Care Act (ACA) plays a significant role in shaping health insurance rules for employers, including those related to part-time employees. Under the ACA's employer shared responsibility provisions, also known as the "employer mandate," large employers (those with 50 or more full-time equivalent employees) are required to offer affordable health coverage to their full-time employees or potentially face penalties.

For ACA purposes, a full-time employee is defined as someone who works an average of 30 hours or more per week, or 130 hours per month. This definition is important because some workers an employer might consider "part-time" could actually qualify as full-time under the ACA, making them eligible for health insurance offerings.

It's crucial for employers to accurately track and calculate employee hours to determine who qualifies as full-time under the ACA, even if the company internally classifies them as part-time. Employers subject to the ACA mandate must offer coverage to all employees meeting the ACA's full-time definition, regardless of the company's internal classifications.

Consistency in Offering Coverage

If an employer decides to offer health insurance to part-time employees, one of the key rules is consistency. The ACA stipulates that if health insurance is offered to part-time employees, it must be offered to all similarly situated part-time employees. This means employers can't cherry-pick which part-time employees receive health benefits – the offering must be consistent across comparable positions and situations.

For example, if a company decides to offer health insurance to part-time employees who work 20 hours or more per week, this offer must extend to all employees meeting that criteria. The company can't offer it to some 20-hour workers but not others in similar roles.

Minimum Participation Requirements

When offering health insurance to part-time employees, employers need to be aware of minimum participation requirements set by insurance carriers. Many insurance companies require that a certain percentage of eligible employees participate in the health plan for it to be viable.

Including part-time employees in the health insurance offering can affect these participation calculations. Employers should work closely with their insurance providers to understand how extending coverage to part-time workers might impact their ability to meet participation requirements and maintain their health plans.

Setting Eligibility Criteria

While employers have flexibility in setting eligibility criteria for part-time employees to receive health benefits, these criteria must be clearly defined and consistently applied. Common approaches include:

1. Minimum hours threshold: For example, offering coverage to part-time employees who work at least 20 hours per week.
2. Length of service requirement: Requiring part-time employees to work for the company for a certain period before becoming eligible for health benefits.
3. Combination of hours and service: Setting criteria that include both a minimum number of hours worked and a minimum length of employment.

Whatever criteria are chosen, they should be documented in the company's policies and communicated clearly to all employees.

Contribution Strategies

Employers offering health insurance to part-time employees have flexibility in determining their contribution strategy. Some options include:

1. Offering the same contribution level as full-time employees.
2. Providing a prorated contribution based on hours worked.
3. Requiring part-time employees to pay a larger share of the premium.

The chosen strategy should be consistently applied and clearly communicated to avoid any perception of discrimination.

Compliance with Non-Discrimination Rules

When offering health benefits to part-time employees, employers must ensure they comply with various non-discrimination rules. These rules are designed to prevent employers from offering better benefits to highly compensated employees or owners while excluding lower-paid workers.

For instance, if a company decides to offer health insurance to part-time executives but not to other part-time staff, this could potentially violate non-discrimination rules. Employers should consult with legal and benefits experts to ensure their part-time health insurance offerings don't run afoul of these regulations.

State and Local Laws

While federal law doesn't mandate health insurance for part-time employees, some states and localities have their own requirements. These can include mandates for paid sick leave, which might apply to part-time workers, or specific health coverage requirements for certain industries or employee classifications.

Employers need to be aware of any state or local laws that might affect their obligations regarding health benefits for part-time employees. This is particularly important for businesses operating in multiple states, as requirements can vary significantly from one jurisdiction to another.

Documentation and Communication

Clear documentation and communication of health insurance policies for part-time employees are crucial. This includes:

1. Defining part-time status and eligibility criteria in employee handbooks and benefits documents.
2. Clearly explaining the enrollment process and any waiting periods.
3. Providing detailed information about coverage options and costs.
4. Ensuring that all employees, including part-time workers, receive required notices about health insurance offerings and their rights under various laws.

Considerations for International Hires

For companies hiring part-time workers internationally, the rules around health insurance can be even more complex. Different countries have varying healthcare systems and employment laws that can affect an employer's obligations and options for providing health coverage to part-time staff.

Employers with international part-time workers should work with global HR experts to navigate the specific requirements and best practices for each country where they have employees.

Final Thoughts

While the benefits of providing health coverage to your part-time workforce can be significant - from improved employee satisfaction and retention to a more competitive hiring position - the administrative challenges can be daunting, especially for companies managing a global team.

This is where innovative solutions like Thera can play a crucial role. While Thera doesn't directly provide health insurance, it can simplify the financial and administrative aspects of managing a diverse workforce, allowing companies to focus more on strategic decisions about employee benefits.

Thera offers a range of services including US payroll, contractor management, and employer of record (EOR) solutions. Schedule a demo today and see how Thera can help you onboard and pay your global team of full-time, or part-time employees.