From the Hotline: Benefit Delay for Employee on Modified Work Hours

Question: Our newly hired regular full-time employee has been on modified work for most of his initial 90 days, averaging approximately 23 hours per week. Due to these limited hours, can we delay his benefit enrollment?

Answer: In this scenario it appears as though there has not been an official change in this person’s status from full time to part time. However, due to ongoing duration of a temporary reduction in hours, there is a set of criteria to be considered while remaining mindful of setting precedence in how all employees are held accountable for meeting benefit eligibility. Presuming that there has been no official change in status from full-time to part-time for the employee, it is important to review the following:

  • What has been officially communicated to the employee regarding benefits eligibility?
  • What has been officially communicated to the employee regarding his temporary reduced schedule?
  • Is the policy with the insurance carrier explicit in the number of hours that must be worked, or is it a statement such as “regularly scheduled to work X hours per week or more”?
  • Has the employer experienced similar situations, and if so, how were those situations handled?

After considering the above items, it is suggested that the employer contact the carrier directly to determine if in fact the employer can make benefits effective as of the initial eligibility date (without delay) based on the hire date and full-time status, even though hours worked have been temporarily reduced for medical reasons. This is based on the assumption that the employee will be working full time hours relatively soon. If the carrier permits eligibility and the employee is enrolled as originally scheduled, but the employee continues to work part-time hours for an extended period of time beyond the eligibility date, then the employer would need to evaluate if it is appropriate to officially change the employee’s status to part time, which will depend on the facts and circumstances at the time of review. If there is a change in status that affects benefits eligibility, and the employee is enrolled, the employer would need to cancel benefits in accordance with status change, and offer continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA). If and when the employee returns to full time, he may be reinstated to benefits as an active full-time regular employee in accordance with your plan documents.

Best practice approach, though, is to work with your carrier and discuss the facts and circumstances at that point in time. If a carrier cannot provide guidance and leaves it up the employer, note that what the employer does for this person will set a precedent for similarly situated employees in the future. It will be important for the employer to clearly communicate with the employee and document the process, so that there is information available to defend any claims from the employee. It is also a good idea for the group to develop a specific policy based on this incident that can be applied to all employees going forward.