Do applicable large employers (ALEs) have to provide coverage to full-time seasonal employees if they do not wish to pay a penalty?

It depends. Full-time (FT) seasonal employees are not expressly excluded from the employer shared responsibility provisions for applicable large employers (ALEs) under the Affordable Care Act (ACA). As a result, FT seasonal employees may have to be offered coverage by an ALE to avoid penalties based upon two factors: how long these employees work for the employer, and which measurement period the employer chooses to use.

For the purposes of determining if coverage must be offered to avoid the penalty, the ACA defines "seasonal employee" as "an employee who is hired into a position for which the customary annual employment is six months or less and for which the period of employment begins each calendar year in approximately the same part of the year, such as summer or winter." See IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act. Examples of seasonal employees include summer lifeguards and winter snow plow drivers.

ALEs may use either the monthly measurement method or the look-back measurement period to determine eligibility for newly hired seasonal employees. The ability to use a look-back measurement period for seasonal employees who are expected to work full time is unique only to those who meet the definition given above of a seasonal employee.

If an employer chooses to use the monthly measurement period, then any FT worker, seasonal or not, would be eligible for coverage in any month he or she averages 30 hours or more per week or at least 130 hours of service for each month.

If an employer chooses to use a measurement period of 12 months, then a seasonal employee (as defined above) working six months or less for the employer would likely not have to be offered coverage, because in most circumstances he or she would not average 30 hours or more per week during the 12-month period (because for six of those months the employee would have zero hours).

If, however, an employer chooses a measurement period of six months or less, then a seasonal employee who averaged 30 hours or more per week would be eligible for coverage if he or she continued to work beyond the measurement period. Remember, any FT employee who works an average of 30 hours per week or 130 hours per month during the measurement period will be deemed eligible for coverage in the subsequent stability period. For example, if an employer's measurement period is three months and a FT seasonal employee averages 30 hours per week during that period, that seasonal employee becomes eligible for coverage at the end of the three-month measurement period.