Do employers have to offer health insurance to part-time workers?

How is part-time employment defined?

Business owners typically consider full-time employment to be someone who works 40 or more hours each week. Part-time employees usually work an average of 30 or fewer hours per week. Or they may work less than 130 hours per month for more than 120 consecutive days.

The Affordable Care Act (ACA) defines a full-time employee as someone who works at least 30 hours per week. This is a key detail to know when determining if you’re subject to the employer mandate.

Besides these basic standards, the Fair Labor Standards Act doesn't outline specific requirements². Generally, individual businesses determine what they consider to be part-time hours.

Ensure you review any state and local employment laws that may provide extra guidelines on part-time work. You should also communicate your chosen maximum hours during the hiring process and in your employee handbook.

Do employers have to offer health insurance to their part-time workers?

The ACA’s employer mandate requires applicable large employers (ALEs) with 50 or more full-time equivalent employees (FTEs) to offer affordable health insurance that provides minimum value to their full-time workers and their dependents. If they don’t, they may have to pay a tax penalty.

If you have fewer than 50 FTEs, you don't have to offer health insurance to any of your employees. Additionally, employers don’t have to offer a medical plan to part-time employees who work less than 30 hours per week. This is the case even if you’re providing coverage to your full-time workers.

Even if it’s not legally required, you can offer your part-time employees health insurance coverage. In fact, it can be a smart move.

Offering health insurance benefits to those with part-time positions can:

• Help improve retention
• Boost company morale
• Increase job satisfaction and employee engagement
• Create a more inclusive workplace culture

What are the requirements for offering health insurance to part-time employees?

Health insurance is one of the top fringe benefits you can offer at your company. But, eligibility for part-time employees depends on federal and state laws and your insurance provider.

Below, we’ll review the two main requirements for offering your part-time staff health insurance.

ACA requirements

According to the ACA, employers must consistently offer healthcare benefits to all similarly situated employees. This means an employer can’t provide health insurance to one part-time worker but deny medical coverage to another part-time employee who works the same number of hours and does the same type of job.

Your company policy should include guidelines detailing part-time employee eligibility criteria for health insurance. Individual businesses can set their own rules as long as they clearly articulate and consistently apply the rules.

Health insurance carrier requirements

Insurance companies have different rules around offering health insurance to part-time employees. Some insurers have policies that allow you to offer health insurance to part-time workers. However, other carriers may prohibit it. That’s why checking with your insurance carrier before providing your part-time workers with healthcare coverage is key.

Additionally, most insurance companies have minimum participation requirements for their health insurance policies. This means that out of all the eligible employees you offer your group health plan, a minimum percentage of them must enroll in it.

If you offer health coverage to your part-time staff, you must include them in your participation rate calculations. If you don’t meet the set rate, your insurer may not let you offer the plan.

How employers can offer a health benefit to their part-time employees

Even if federal law doesn’t require you to provide health insurance to your part-time staff, you should consider it. Hourly wages are always important. But, part-time job seekers typically want some extra perks before accepting a new job.

Luckily, there are cost-effective health benefit options for your full- and part-time employees. Below are two innovative healthcare benefits options for employers of all sizes—health reimbursement arrangements (HRAs) and health stipends.

Health reimbursement arrangements (HRAs)

An HRA is a flexible and cost-effective employer-funded health benefit. With an HRA, employers can reimburse their employees tax-free for their individual health insurance premiums and qualifying out-of-pocket costs.

Here are some key features of HRAs:

• You set a monthly allowance for your staff to spend on medical care. Once an employee with qualifying coverage buys an eligible expense and submits proof, you reimburse them tax-free up to their allowance amount.
• HRAs aren’t pre-funded accounts. You only reimburse employees when they incur an eligible expense.
• Employer contributions are tax-deductible and free of payroll taxes. Employee reimbursements are income tax-free.
• Unlike health savings accounts (HSAs), HRA funds stay with you when an employee leaves your company.
• HRA allowances can roll over monthly. But, in most cases, any unused allowance expires at the plan year's end.

There are three popular types of HRAs. The first one we’ll cover is the qualified small employer HRA (QSEHRA).

QSEHRAs are for employers with fewer than 50 FTEs that don’t offer traditional group health insurance. The QSEHRA is automatically available to all full-time W-2 employees as long as they have a health plan with minimum essential coverage (MEC). But, employers can offer it to part-time employees if they receive the same allowance as those in a full-time position.

The other two types of HRAs are available to employers of any size. These are the individual coverage HRA (ICHRA) and the integrated HRA, also known as the group coverage HRA (GCHRA).

The ICHRA is a stand-alone HRA, like the QSEHRA. Employees need qualifying individual health coverage to participate. In contrast, a GCHRA can only supplement an employer-sponsored group health plan.

The ICHRA and the GCHRA allow you to create specific employee classes to customize eligibility and allowances. Employee classes separate employees into groups by legitimate job-based criteria, such as part-time employees.

ICHRAs have 11 employee class options, and integrated HRAs have seven. You can offer employees in different classes different allowances. But, those within the same class must have the same allowance.

Health stipends

A health stipend is a fixed amount of money you offer your employees to help them pay for health insurance coverage and other medical expenses. You can offer a health stipend on its own or with another health benefit, like a group plan or an HRA.

Stipends are very customizable. You can offer them as a one-time bonus, on a regular basis with allowance caps, or use a reimbursement model. Then, employees can buy the medical care that suits their needs. This flexibility gives you and your employees more control over your health benefits.

Better yet, your full-time and part-time employees can compliantly receive a stipend, making them a nice perk that can support any type of workforce.

However, the federal government doesn’t consider stipends a formal health benefit like HRAs. You can’t make your employees prove they spent their allowance on health insurance or medical items listed in IRS Publication 502³. Stipends also don’t satisfy the employer mandate if you’re an ALE. Lastly, the IRS considers stipend money as taxable income for the employee.

Conclusion

Offering part-time employee benefits like health insurance has several advantages. While not required, employers can better attract and retain talent, promote a healthy workforce, and show employees they care about their well-being—whether they work full- or part-time.

With an HRA or health stipend through PeopleKeep by Remodel Health, your part-time staff will have a personalized health benefit that won't break your budget. Contact us today, and we’ll set you up with the right health benefits for your company.

This article was originally published on May 18, 2022. It was last updated on March 28, 2025.