There are often different eligibility requirements for employee benefits like health insurance, retirement plans, and paid time off (PTO). Employers and employees need to have a clear understanding of what constitutes an eligible employee and the requirements to qualify for specific benefits.
In this article, we'll cover what an EE is and what the requirements are for different types of benefits.
Takeaways from this blog post:
- An eligible employee (EE) is someone who meets certain criteria set by their employer or the government to qualify for benefits and perks.
- Employee benefits—such as health reimbursement arrangements (HRAs)—have specific eligibility requirements for employees to participate. These requirements vary by benefit type.
- Employers and employees should have a clear understanding of eligibility criteria to ensure they utilize company benefits effectively and fairly within the workplace.
An eligible employee (EE) is typically defined as an individual who meets certain criteria set forth by the employer or government to qualify for certain benefits and perks, such as health, retirement, or leave benefits for employees. These criteria can vary depending on the specific benefits an employer offers and the guidelines they set.
For health insurance benefits, employers usually require eligible employees to work a certain number of hours per week or be with the company for a certain length of time before being able to enroll in the employer's health insurance plan. Some employers may also require employees to meet specific job classifications or employment statuses to be eligible for benefits.
At the federal level, the Affordable Care Act (ACA) requires organizations with 50 or more full-time equivalent employees (FTEs) to offer health insurance coverage to at least 95% of their full-time employees, or those who work at least 30 hours per week. This means full-time employees must be eligible for the health benefit, or the employer could face steep penalties. However, the employer can determine whether part-time employees are eligible for the benefit. Employers can also offer different classes of employees different benefits. For example, an employer may provide salaried employees with a group health plan, while making hourly employees eligible for an individual coverage health reimbursement arrangement (ICHRA).
Retirement benefits, such as a 401(k) plan, may have different eligibility requirements, such as a minimum age or length of service with the company. Employees may also have to contribute a certain percentage of their salary to the retirement plan to be eligible for employer-matching contributions.
Other benefits, such as PTO, flexible work arrangements, and employee wellness programs, may have their own set of eligibility criteria that employees must meet to participate. These criteria may include factors such as length of employment, job classification, or meeting certain performance metrics.
Any employee benefit plan subject to ERISA must include eligibility criteria in its plan documents. Employers and employees should be able to easily determine whether they’re eligible for the benefit by looking at the plan documents.
Health reimbursement arrangements (HRAs) are IRS-approved, employer-funded health benefits. They allow employers to reimburse employees tax-free for their healthcare expenses. Depending on the type of HRA, these can include individual health insurance premiums.
HRAs can differ in terms of annual contribution limits, reimbursable expenses, and eligibility requirements for employers and employees. This comparison chart shows EE requirements for some of the most common HRA plan types.
|
Type of HRA |
Eligible employees |
|
Qualified small employer HRA (QSEHRA) |
All full-time W-2 employees are eligible for the QSEHRA. Employers can also choose to include part-time employees, even though the federal government doesn’t require them to. |
|
Individual coverage HRA (ICHRA) |
To participate in the ICRHA, an employee must have a qualified individual health insurance plan with minimum essential coverage (MEC). Employers can then structure eligibility based on 11 different employee classes, such as part-time and full-time employees. |
|
Group coverage HRA (GCHRA) |
The GCHRA is only available to employees who are enrolled in the employer's group health insurance plan. Employers can also determine eligibility based on seven employee classes. |
|
Excepted benefit HRA (EBHRA) |
Any employee offered group health plan coverage can participate in the EBHRA. |
Employers can use an HRA in place of a traditional group health insurance policy, or they can use an HRA alongside it, depending on the type of HRA they offer.
Either way, offering a health benefit has a major impact on employee retention and recruitment. According to our 2022 Employee Benefits Survey Report, 87% of employees value health benefits, such as health insurance. Additionally, 82% of employees say that the benefits package an employer offers is an important factor in whether or not they accept a job.
Employers must clearly communicate the eligibility requirements for each benefit they offer to employees to avoid confusion. This also ensures that all eligible employees can take advantage of the benefits available to them. It's also important for employers to regularly review and update eligibility criteria to reflect changes in company policies, industry standards, and legal requirements.
Employees must carefully review the eligibility criteria for each benefit their employer offers. They should also ask questions if they're unsure about their eligibility and review the benefit plan documents. By understanding the requirements for different types of benefits, employees can make informed decisions about which benefits to enroll in and how to maximize the value of the benefits package provided by their employers.
Whether you're an employer looking to provide benefits to your employees or an employee seeking to understand what you are entitled to, knowing what defines an eligible employee and the requirements for different types of benefits is essential. This knowledge can help ensure that benefits are utilized effectively and fairly within the workplace.