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To a word nerd, they are difficult to define.

benefits-eligibility-for-alternative-workforce

As the producer of Businessolver’s thought-leadership webinars and related content, one of the most challenging aspects of my job is describing evolving industry trends using language that is, well, still evolving.

Until the ACA came along, we all thought we knew the difference between “full-time” and “part-time” employment. And, before Uber, eBay and TaskRabbit were household names, a “gig” was just something your guitar-playing cousin did on the weekends.  

The economy has changed. Let’s talk about it.

The last webinar I put together, Beyond the Paycheck, was all about making sense of how organizations can distinguish themselves as an “employer of choice” by offering benefits to workers who are—at least traditionally—“ineligible” for benefits. If you listen to the webinar, it’s a pretty simple concept: to foster loyalty among your otherwise benefits-ineligible workers, you would do well to provide an easy-to-navigate path to benefits they can manage on their own.

But words get in the way.

What does “benefits ineligible” mean? Is a “contractor” or “temp worker” considered an “employee”? How does the government’s definition of “part-time” and “full-time” impact the penalties I may have to pay for not providing healthcare coverage? And, which governmental definition should I use?

While I can’t hold a candle to our compliance expert Bruce Gillis and our Strategy Practice Leader Sherri Bockhorst, I’m a proud “word nerd.” To me, language matters. So, I worked with Bruce, Sherri and our webinar panelist Ben Conley to develop a short glossary of terms employers may encounter when considering who among their workers are “benefits eligible.”

Here are the entries. I hope they help you navigate and understand this rapidly evolving economy.

Alternative workers: The U.S. Bureau of Labor Statistics’ glossary groups these into four types of alternative employment arrangements: 1) independent contractors, 2) on-call workers, 3) temporary help agency workers, and 4) workers provided by contract firms. They differ from full- and part-time employees in that they do not have a direct employer-employee relationship with the entity to which they provide services. They are 1099 form recipients.

Benefits ineligible. The broadest category of populations that are not eligible for an employer-sponsored benefits package per the company’s policies.

Employee: According to the Internal Revenue Service, the common law definition of this term is dependent on three types of facts that provide evidence of the degree of control and independence:

  • Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  • Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  • Type of Relationship: Are there written contracts or employee-type benefits (e.g., pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor.

Gig economy. According to Investopedia, in a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees. A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career.

Health Reimbursement Arrangement (HRA): According to the IRS as of June 2019, HRAs are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the account. Health Reimbursement Arrangements are sometimes called Health Reimbursement Accounts.

On June 13, 2019, the federal government issued a rule that finalized proposed regulations and introduced “individual coverage HRAs” effective Jan. 1, 2020. Unlike the HRAs that came before, the new regulations allow employers to offset the cost of premiums their employees pay for coverage through health insurance exchanges or products like Businessolver’s MyChoiceSM Marketplace.

Multiple Employer Welfare Arrangement (MEWA): According to Investopedia, this is a system for marketing health and welfare benefits to employers, for their employees. Also described as a "multiple employer trust (MET)," a multiple employer welfare arrangement is when a group of employers combines their contributions in a self-contributing benefits plan for the benefit of their employees.

For the arrangement to work, the employers must make contributions to the plan based on the number of employees they have and the estimated costs associated with each employee. MEWAs are a way for smaller companies to offer employee benefits outside of the government-run health insurance exchanges by sharing risk. They became popular as a result of the Patient Protection and Affordable Care Act (ACA).

Part-time employees. The U.S. Bureau of Labor Statistics’ glossary defines these as “persons who work less than 35 hours per week.” When talking about the MyChoice Market expansion, Businessolver uses the term to refer to workers who have an employer-employee relationship with the organization. They are employees and may be seasonal or ongoing. Depending on the employer’s policies, part-time employees may or may not be offered employer-sponsored benefits, including group health plans. Per the ACA, employees who work at least an average of 30 hours per week are considered full time for the purposes of determining employer mandate responsibilities.

Interested in more information on part-time and alternative workers? Check out our e-book below.  

Benefits eligibility

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