Global Tax Insights
Your Seasonal Workers Could Trigger the ACA’s Play-or-Pay ProvisionJuly 08, 2014
If you use seasonal workers, you could be in for an unwelcome surprise.
The Affordable Care Act’s “play-or-pay” provisions set to take effect Jan. 1, 2015. You may not think it applies to your company because you don’t employ enough workers, but if you use seasonal workers, you could be in for an unwelcome surprise.
The Play-or-Pay Provision
The play-or-pay provision imposes a penalty on “applicable large employers” that don’t offer a “minimum value” of “affordable” health care coverage to their full-time employees if just one full-timer enrolls in a qualified health plan through a government-run Health Insurance Marketplace and receives a premium tax credit.
For 2015, an applicable large employer generally is one with at least 100 full-time employees or a combination of both full-time and part-time employees that’s equivalent to at least 100 full-timers.You’ll use information about your 2014 workforce to determine if you’re an applicable large employer for 2015.
The Role of Seasonal Workers
Seasonal workers are taken into account when determining whether you hit the 100-employee threshold. The good news is that if your workforce exceeds 100 full-time employees (or the equivalent) for 120 days or fewer during the relevant calendar year (2014 for 2015) — and the employees in excess of 100 during that period were seasonal workers — you won’t be considered an applicable large employer.
Seasonal workers for this purpose are defined as workers who perform labor or services on a seasonable basis. The IRS says employers can apply a reasonable, good faith interpretation of the term.
If you employ a seasonal workforce that puts you over the 100-employee threshold part of the year, take steps to ensure that these workers are on board for no more than 120 days in the calendar year. Otherwise, you could end up being considered an applicable large employerand subject to the play-or-pay provision.
Also keep in mind that the 100-employee threshold is scheduled to drop to 50 for 2016 and subsequent years — and, in some cases, the 50-employee threshold can apply in 2015.
To learn more about whether you could be subject to the play-or-pay provision in 2015, please contact us.