Don’t Assume Your Summer Interns Are Not Eligible for Health Benefits
Summer intern season is almost upon us. Hooray! Or perhaps, “Boo!” if you are a recruiter being inundated with thousands of resumes and calls from eager potential interns.
Now that the Affordable Care Act’s Employer Mandate (also known as “Play or Pay”) has taken effect, one of the questions we hear on the ThinkHR Live Hotline lately is: “Am I required to offer health benefits to my interns?” The answer may be yes. Don’t assume that interns are excluded from your health plan; doing so may lead to costs or compliance issues you were not anticipating.
In order to determine whether or not an intern might be eligible for your company health benefits, consider the following:
- Are you a large employer under the Affordable Care Act (ACA)? Large employers are subject to potential penalties if they do not offer qualifying health coverage to the majority of their full-time employees. Large employers are those who had 50 or more full-time or full-time equivalent employees in the previous calendar year. If you aren’t a large employer, these potential penalties won’t apply.
- How many hours a week will the intern work, on average? The ACA defines full time as regularly working 30+ hours a week. If, at the time of hire, you reasonably know the intern will regularly work 30+ hours per week, treat them as any other health benefit eligible new hire. If you are legitimately unable to determine whether the intern will work more than 30+ hours a week, you may be able to measure the intern’s hours worked over a period of time using a monthly measurement method or a look-back measurement method to determine whether they are full time.
- How long will the intern be employed? If the intern will be employed less than 90 days, you won’t incur a Play or Pay penalty if you don’t offer health coverage. Penalties don’t apply to an employee who does not continue through the first day of their fourth month of employment. However, you must still follow the terms of your company’s health plan.
- What are the terms of your health plan documents? Ultimately, you need to comply with the eligibility terms in your plan documents. If the plan document says full-time employees are eligible for benefits on the first of the month after 30 days, apply these terms to any eligible employees, including interns.
- Could your intern meet the definition of a “seasonal employee” under the ACA? Under play or pay, the ACA allows for a category of individuals called seasonal employees. These employees are those whose customary annual employment for the position is six months or less and generally begins at the same time (season) each year. This label is relevant because it may allow you to use a look-back measurement period which would exclude these individuals from coverage.
- How are you measuring service hours for this group of employees? In circumstances where you can’t reasonably determine whether a new intern will work 30+ hours per week, or if the intern meets the definition of a seasonal employee, you may use either a monthly or look-back measurement method to define whether/when the intern becomes full time. Under the look-back method, for example, you could define a measurement period between 3 and 12 months to determine whether the intern is truly full time. In the case of the 12-month measurement period, the intern would likely never reach full-time status if he or she only works during the summer.
Many employers are surprised to realize that they may actually have to offer benefits to their interns. It’s helpful to know this beforehand to ensure you can structure your program accordingly and account for any potential added costs. While many interns may turn down an offer of health coverage, you should not assume that they all will.
Note: The list above assumes these are paid interns who are considered common-law employees.