Decoding Hours for Part-Time Employees ACA Rules Made Simple

Before the Affordable Care Act (ACA), “full time employees” were generally defined as those working a 40-hour workweek. Those working fewer hours – whether 10, 25, or another number – were considered part-time employees and often did not receive the same benefits as the full-time employees. The introduction of the ACA brought significant changes to these definitions, aiming to provide more consistent healthcare coverage across different types of employment.

However, under the ACA, full-time workers are those working an average of at least 30 hours per week, or at least 130 hours per month. That discrepancy has prompted many employees to ask, “What is full-time? Does my employer have to offer benefits to me if I work 30 or more hours?”

The answer is, “It depends.”

Employers with 50 or more full-time or full-time equivalent (FTE) employees – are required to offer health care benefits to those working at least 30 hours a week or at least 130 hours a month. If an employer does not offer employee benefits, the business is subject to a tax penalty.

For small employers – those with fewer than 50 full-time employees – offering employee benefits is discretionary. There’s no requirement to offer benefits. The decision is left up to the employer.

Seasonal workers do not have to be included in the employer’s full-time equivalent employee calculation.

If a smaller employee not subject to the ACA employer mandate does choose to offer health coverage to its employees, that coverage must meet certain ACA specifications.

If you have a workforce of full-time and part-time employees, and you are unsure about how to calculate your group size, visit HealthCare.gov or CalChoice.com to use the ACA calculators offered on those sites.

Under the Affordable Care Act (ACA), the definition of “full-time” has brought some complexities to the workplace, especially when determining which employees qualify for health care benefits.

To better understand how this works, here are some practical scenarios for business owners to consider:

Scenario 1: A Large Employer (50 or More Full-Time or FTE Employees)

Example: Imagine a company operating a medium-sized warehouse with 60 employees, where 45 work 40 hours a week and the other 15 typically work a variable schedule of 28–35 hours each week.

• Under the ACA, employees working an average of 30 or more hours per week (or 130 hours per month) are considered full-time. The employer must count those 15 variable-hour employees as full-time if their hours meet the ACA criteria over a designated measurement period.
• If the employer does not offer health benefits to those considered full-time under these guidelines, the business is subject to a tax penalty. The employer must either offer coverage to all employees averaging 30+ hours or risk financial consequences.

Scenario 2: A Small Employer (Fewer Than 50 Full-Time Employees)

Example: A family-owned retail store has 20 staff members made up of 10 full-time employees working 40 hours a week and 10 part-time employees working 25 hours a week.

• Since the business has fewer than 50 full-time or full-time-equivalent employees, it is classified as a small employer under ACA standards. This means offering health benefits is optional.
• The employer can decide not to offer benefits to any employees or to only provide coverage to full-time staff working at least 30 hours per week. The choice is theirs, without risk of penalties.

Scenario 3: A Growing Business Crossing the Threshold

Example: A landscaping company starts with 40 employees, all working 40-hour weeks. It later adds 15 seasonal workers working 35 hours weekly during a six-month peak season.

• Seasonal employees do not necessarily count towards the 50-employee threshold if they work fewer than 120 days in the year. If the company keeps those workers beyond the seasonal limit, it may cross the threshold into “large employer” territory and become subject to the ACA’s mandate to offer benefits to full-time employees.
• This would require the company to track hours carefully and adjust their benefits offerings to remain compliant.

Scenario 4: Variable-Hour Employees

Example: A catering company employs 25 regular staff who work 40 hours each week, but also has 30 part-time servers whose schedules vary every month, ranging from 20 to 35 hours depending on event bookings.

• The employer must use a “look-back measurement period” to determine which employees count as full-time. If servers regularly average 30+ hours over this period, they are considered full-time for ACA purposes, and the company (if classified as a large employer) must include them in its health care plan to avoid penalties.
• If these employees remain under the 30-hour threshold, the employer is not obligated to extend benefits to them.

These scenarios highlight how the ACA’s full-time definition can impact benefits compliance. While large employers must carefully track hours and extend coverage as needed, small employers enjoy the flexibility to decide whether offering health benefits aligns with their budget and goals. No matter the size, understanding and managing employee classifications ensures compliance and helps foster a supportive workplace.

Employer Discretion for Offering Health Insurance

While many employers with fewer than 50 FTE equivalent workers choose to offer employee benefits, there’s no requirement that they do so. The only requirement is that employers be equitable in their treatment of employees. The same standards apply to all employees when determining benefits eligibility. If the employer sets a 30-, 35-, or 40-hour requirement, it applies to all workers. Offering benefits to one employee who works 36 hours, and requiring others to work 40 hours to be benefit-eligible could trigger a discrimination lawsuit.

In a competitive talent marketplace, many smaller employers choose to offer employee benefits because it helps them attract and retain their top employees. Workers appreciate those benefits, too – especially health insurance. In the 2021 MetLife Annual Benefit Trends Study, 85% of employees put health insurance at the top of their “must have” list – and another 10% say health insurance is “nice to have.”

Talk With a Broker to Learn More

If you want to find out if you’re getting the most value for your benefit dollars – or if you want to add employee benefits for your employees – talking with a broker is a great place to start. Most brokers offer their services at no cost to you. If you don’t have a broker, you can search for one on the MyCalChoice website.