You Don’t Need To Offer Coverage to Part-Timers – But You Probably Should
Part-time employees are often an invaluable part of the Colorado workforce. They work just as hard (though for fewer hours) than full-time employees and provide more flexibility for employers. Also, many of employers’ legal and financial obligations regarding full-time workers do not apply to part-time staff. This includes the obligation to provide employer health insurance benefits.
While not all Colorado employers have to offer health insurance to their full-time employees, even those that do are under no legal obligation to provide part-time workers with health insurance coverage. But many business owners choose to do so anyway. That is because offering part-time staff health insurance can be a wise business decision that benefits employers just as much as it does their workers.
You Are Not Legally Obligated To Offer Health Coverage To Part-Time Employees
If your business employs under 50 full-time or “full-time equivalent” (FTE) workers, you are not obligated to provide health insurance coverage options for employees. According to the Affordable Care Act (ACA) guidelines, a full-time employee works 30 hours or more each week or 130 hours every calendar month, including paid leave time and vacation days.
However, suppose your Colorado business has 50 or more full-time or FTE employees. In that case, you are considered an “applicable large employer” (ALE) as defined in the ACA – and you have a legal responsibility to offer an ACA-compliant plan to at least 95 percent of their full-time employees.
Whatever the size of your company and your coverage obligations to full-time employees, you do not have to offer any coverage to part-timers, even if you’re providing insurance to your full-time employees.
However, if you offer health benefits to part-timers, those benefits must be the same for all similarly situated employees. Not all health insurance companies offer coverage for part-time employees, so you would be wise to consult an experienced group health insurance broker who can help you locate the best coverage for your company.
Related: How Much Does Health Insurance Cost for Employees?
Why Offer Part-Time Employees Health Insurance If You Don’t Have To?
Many of the reasons Colorado employers offer full-time employees health coverage even when they don’t have to are the same reasons they choose to extend group insurance to their part-time employees. These include attracting and retaining top talent and a healthier, more productive workforce with lower absenteeism due to illness or injury.
Even with these advantages, many employers have concerns about the associated costs and are hesitant to offer coverage to part-time employees. But if you only look at what your company pays in premiums, you may miss the bigger picture. Why? Because all expenses related to health insurance, whether for full-time or part-time workers, are 100 percent tax-deductible under both federal and Colorado state law. Expanding your health insurance program to cover part-time workers can create substantial tax savings.
And the burden of premiums does not have to fall solely on your balance sheet. You can have part-time employees pay a portion of the premiums with pre-tax deductions for their paychecks. This lowers the amount of your employee’s taxable income – thus increasing the amount that winds up in your workers’ pockets each pay period.
Related: What Is SHOP Health Insurance for Small Businesses in Colorado?
Tax Credits Available For Small Businesses Offering Coverage To Part-Time Employees
For Colorado’s small business owners, there are substantial tax benefits to providing health insurance to part-time employees. The ACA includes small business healthcare tax credits of up to half of your premium expenses for any two-year period. Per the IRS, companies can typically claim the small business health care tax credit so long as they:
- Have at most 25 full-time equivalent employees.
- Pay average wages of less than $50,000 annually per FTE worker (indexed for inflation each year).
- Offer employees a Small Business Health Options Program qualified health plan (or qualify for a limited exception to this requirement).
- Pay for at least half of the employee-only health care coverage cost.
All that being said, however, the tax implications of offering health benefits to part-time employees can be nuanced and complicated. To fully understand how group insurance programs affect your company’s tax obligations, consult an experienced health insurance broker and a tax professional.
Speak With One Of Our Group Health Insurance Brokers Today About Coverage For Part-Time Employees
Preferred Insurance has been helping Colorado businesses navigate the complex landscape of group health insurance coverage for decades. As an experienced Colorado small business and individual health insurance broker, we will be here to answer your questions and provide guidance on affordable coverage options.
Speak with an experienced broker at Preferred Insurance today to schedule your free consultation and discuss your group health insurance needs.