Whether you need to offer benefits depends on your health plan eligibility terms. However, offering benefits to interns can enhance your employment brand and reputation in college placement offices and within the labor marketplace overall.
Summer interns by nature are “temporary” employees as their duration of employment is expected to last not more than the summer (e.g., 90-120 days). While you can classify these employees as temporary, their eligibility for benefits will be determined by the terms of your group health insurance plan and the terms of any other company-provided benefits policies.
With respect to healthcare benefits, temporary or seasonal workers don’t qualify under many plans. Employees who work less than six months are often excluded from the plan and not offered coverage per the plan’s guidelines. However, if the temporary work period exceeds six months, they would usually be treated as a regular employee, even if they are being classified as ”temporary” in the employer’s internal systems. We recommend you check with your insurance broker to see if there is specific wording that would make temporary or seasonal workers eligible under your plan.
If your summer interns are eligible, you should provide them with access to this benefit per your usual waiting periods. We recommend you confirm your plan’s exact rules with your carrier or benefits broker to ensure you’re following your plan’s expectations.
Note: Applicable large employers (ALEs) may be required to offer group health insurance benefits to avoid potential penalties under the Affordable Care Act (ACA). ALEs are employers that had an average of 50 or more full-time equivalent employees in the prior calendar year. Under the ACA rules, interns can be defined as seasonal employees when hired into positions for which the customary annual employment is six months or less. The ACA requirement to offer health insurance may be triggered for seasonal employees (interns) depending upon a complex set of rules. Employers with fewer than 50 full-time equivalent employees are exempt from the ACA requirement to offer health insurance to avoid potential tax penalties.
In general, the HIPAA Rules do not apply to employers or employment records. HIPAA only applies to HIPAA-covered entities – health care providers, health plans, and health care clearinghouses – and, to some extent, to their business associates. If an employer asks an employee if they are vaccinated or to provide proof that they have been vaccinated, that is not a HIPAA violation, and employees may decide whether to provide that information to their employer.
In accordance with the Affordable Care Act’s (ACA’s) employer shared responsibility provision (so-called “play or pay” rules), there are two measurement methods to determine health coverage eligibility: the monthly method or the look-back method. Under the look-back method, employees who averaged at least 30 hours per week in the measurement period are deemed eligible for the subsequent stability period, even if their hours are reduced to fewer than 30 hours per week. In other words, if an employee chooses to enroll, their medical plan coverage will automatically continue for the entire stability period.
Further, if the coverage is part of a cafeteria plan (which allows employees to make pretax contributions), they would not be able to drop the coverage since their eligibility has not changed. Fortunately, the IRS recognized that employees in a stability period whose work hours are reduced could become stuck in a plan they no longer want or can afford. So, the IRS revised the cafeteria plan rules to give the employer the option of amending its plan to allow employees to drop coverage if certain criteria are met.
Specifically, an employee may elect to drop coverage due to the reduction in hours, provided the employee intends to enroll in another plan providing minimum essential coverage with the new coverage effective no later than the first day of the second month following the date the original coverage is dropped.
To recap, the employer’s cafeteria plan may allow an employee to drop medical coverage (but not dental/vision coverage or a health flexible spending account (HFSA)) during the stability period if:
- The employee has a change in employment status and will reasonably be expected to average less than 30 hours of service per week; and
- The employee intends to enroll in another medical plan (such as a spouse’s plan or a Marketplace plan) by the start of the second month after dropping this employer’s plan.
To allow this election change, the employer must amend its § 125 cafeteria plan and adopt the amendment by the end of the plan year in which the election change is allowed. The employer also must inform all cafeteria plan participants of the amendment.
