Benefits offered by employees, such as health insurance, may not be guaranteed for working part-time. There aren’t many regulations governing part-time employment, meaning employers can make their own choices regarding eligibility. But, providing your part-time employees with health insurance might be worth it. In return, you’ll be able to attract more skilled part-time workers.
This blog discusses the prerequisites for providing health insurance to employees working part-time and what options for health benefits get offered to employers.
What kind of work qualifies as part-time?
Most business owners consider full-time employment for 40 or more hours per week. Part-time workers typically have, on average, 30 or fewer hours per week and under 130 hours per month for longer than 120 days in a row.
Employers must also be aware of any local or state laws that define the definition of part-time work. The employer must determine the hours appropriate for part-time workers and then communicate that information to employees in writing during the selection process.
Do employers need to provide health insurance for their part-time employees?
If you are a small business with less than 50 full-time equivalents (FTEs), you’re not obliged to provide health insurance to any workers. Suppose you’re an applicable large employers ALE with part-time employees employed for less than 30 hours weekly. In that case, you do not need to offer health insurance coverage to them, even if you provide insurance to full-time workers.
Although it’s not legally required, employers can offer part-time employees health insurance. The provision of health insurance benefits for employees who work part-time can assist in improving the retention of employees and morale, improve the satisfaction of employees, and build an inclusive workplace.
How Businesses Can Provide Part-Time Workers with a Health Benefit
It’s not a requirement to offer health insurance for your employees on a part-time basis isn’t a reason not to do it. The hourly wage is always an essential factor, and part-time employees usually expect to be provided fringe benefits before they decide to accept a new job.
Many cost-effective health benefits options can meet your part-time or full-time employee’s healthcare requirements. Health reimbursement arrangements and health stipends are two rising-in-popularity healthcare benefit choices for companies of all sizes.
Health Reimbursement Arrangements (HRAs)
HRA provides an employer-funded healthcare plan that lets employers reimburse employees for their health insurance premiums and occasionally eligible medical expenses.
HRAs can benefit both employers and employees. Suppose an employee’s health insurance policy meets the minimum essential coverage (MEC) requirements. In that case, their employer payments are tax-deductible, payroll tax-free, and income tax-free.
HRAs aren’t pre-funded accounts. Employers determine their desired monthly allowance, and employees get reimbursed when they have an acceptable cost. In contrast to health savings accounts (HSAs), HRA funds remain with the employer after the employee quits the company.
There are three kinds of HRAs. The first is a qualified small-sized employer HRA (QSEHRA). QSEHRAs are available to employers with less than 50 employees and do not offer collective health coverage.
If a QSEHRA gets offered, the benefit gets provided to all full-time employees. However, employers can give it to employees working part-time, provided they get the same benefits as full-time employees.
The two other HRAs for companies of all sizes offer individual HRA (ICHRA). The combined HRA gets commonly referred to as the group coverage HRA (GCHRA). The ICHRA can only be provided to employees with individual health insurance, unlike the QSEHRA, which is the crucial distinction between the two. At the same time, integrated HRAs supplement an employee’s group health insurance.
Both ICHRAs and integrated HRAs can create particular classes for employees. Employee classes get used to separate employees by employment-related criteria, for example, part-time employees.
The ICHRAs have 11 employee class choices, while integrated HRAs have seven options. Employees in different classes can get given different allowance amounts, and those of the same type should provide the same amount.
Health Stipends
A health stipend is a set sum of money provided to employees to defray the cost of a health insurance plan and additional medical expenses. They’re a good option for businesses that want to avoid dealing with restrictive and costly group health insurance plans.
Stipends are an extremely flexible option for health benefits. Employees can select the health options that meet their requirements. At the same time, employers can choose monthly allowance limits that give employees total control over health benefits expenses. Additionally, all part-time and full-time employees can be eligible for the salary.
But, stipends tend to be less restricted than HRAs. Employers cannot require employees to show that they used the money they received on healthcare insurance coverage or health items. Stipends also are added to a worker’s pay as a form of income, which means they get taxed as income.
Conclusion
The provision of health insurance to part-time employees has many benefits. Whether full- or part-time employees, businesses can improve talent attraction and retention, foster a healthy workplace culture, and demonstrate a concern for their worker’s well-being.
Through an HRA or a stipend, your employees working part-time can enjoy an individual health plan covering all their healthcare requirements without breaking the budget. Contact Ottawa Life Insurance at (613) 454-1424 or email us at info@ottawa-lifeinsurance.ca, and we’ll set you up with your perfect health benefits solution.
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