Part-Time Employee
A part-time employee, for ACA purposes, is anyone who does not average 30 hours of service a week. Part-time staff still matter, because their hours count toward whether you are a large employer.
The three things to know.
Below the Line, Not Out of the Picture
Part-time status removes the employee from the full-time group, so no mandate offer is required for them. It does not remove them from the large-employer count, where hours convert to full-time equivalents.
Status Can Change
Under the monthly method an employee can move across the line from one month to the next. Under the look-back method the measurement period decides, and the result holds for the stability period.
Offering Anyway Is Allowed
Nothing prevents an employer from offering coverage to employees who are not full-time. Doing so is a plan-design choice and not a mandate requirement.
Sources: 26 CFR § 54.4980H-1; 26 CFR § 54.4980H-2. General information, not legal advice.
A worked example.
A Weekend Stagehand
Marcus works Friday through Sunday shifts averaging 18 hours a week all year. Over 12 months he logs 936 hours.
What the Rule Produces
That averages 18 hours a week, well under 30, so Marcus is not full-time. His 936 hours still count toward full-time equivalents: 78 hours a month is 0.65 of an equivalent. No mandate offer is required for him.
Four steps to apply it.
1. Identify the group
List employees averaging under 30 hours.
2. Check plan eligibility
Confirm whether your plan offers coverage to them anyway.
3. Count the hours
Capture monthly hours for the equivalents calculation, capped at 120 per person.
4. Re-test
Re-measure at each cycle, since hours can rise.
Where it goes wrong. Leaving part-time hours out of the large-employer count, which can leave you thinking you are under 50 when you are not.
The questions that come up next.
Do we have to offer coverage to part-time employees?
Not under the employer mandate. The mandate looks at full-time employees. Your plan document and any other law, such as state rules, may still decide who is eligible.
Can part-time employees buy coverage on the Marketplace?
Yes. A person who is not offered employer coverage can generally use the Marketplace, and the employer penalties are tied to full-time employees who receive subsidies.
How close to 30 hours is too close?
There is no safe margin written into the rule. If hours routinely land between 27 and 33, the look-back method with a longer measurement period is usually easier to defend than monthly tracking.
Can a part-time employee decline a plan offer?
Yes. Employees can waive coverage you offer, and a documented waiver is useful evidence of the offer.
Do part-time employees affect our penalties?
Penalties are calculated on full-time employees, but part-time hours influence whether the mandate applies to you at all.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Hours of Service
Hours of service include every hour worked plus every hour for which pay is made or due, such as paid vacation, holiday and sick time.
Full-Time Equivalents
Full-time equivalents convert part-time hours into a number of full-time employees.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
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