Do You Have to Offer Healthcare Benefits to Part-time Workers?

Under federal law, companies are not required to offer healthcare benefits to part-time employees. But here's what often gets missed: part-time workers still impact your responsibilities under the Affordable Care Act (ACA), even if you’re not required to insure them. Part-time hours still count when calculating a company’s Applicable Large Employer (ALE) status, which determines whether you’re required to provide insurance to full-time workers. And if you miscalculate, the penalties can be steep.

In this article, we'll break down how to properly define and classify part-time employees, whether ACA compliance requires offering coverage to part-time workers, and provide affordable healthcare benefit options that help you support your team and retain top talent.

Key Takeaways:

• You’re not required to offer healthcare coverage to part-time employees—but their hours still matter
• Part-time hours count toward your ACA compliance and Applicable Large Employer (ALE) status
• Offering benefits to part-time employees can boost retention and help you attract stronger talent

What Qualifies as Part-time vs. Full-time Employees

Misclassifying your employees is one of the most common mistakes employers make that winds up costing them thousands in ACA penalties. The ACA has specific criteria that define full-time versus part-time status, and getting it wrong can lead to fines from the IRS.

Here’s what the ACA defines:

• Full-time employee: Anyone working 30 hours or more per week or 130 hours per month
• Part-time employee: Anyone working fewer than 30 hours per week or fewer than 130 hours per month on average

It's not just about job titles. If a part-time employee consistently works 30+ hours, they could be reclassified as full-time under the ACA. Be sure your HR and scheduling systems track this accurately.

Do Employers Have to Offer Health Insurance to Part-time Workers Under the ACA?

No, employers are not required to offer part-time workers insurance under the ACA. Here’s how it works, if you employ fewer than 50 full-time employees or full-time equivalents (FTEs), you’re not considered an Applicable Large Employer (ALE), and therefore, you’re not required to offer health insurance to any employees, full- or part-time.

If your company is an ALE, you are legally required to offer Minimum Essential Coverage (MEC) to 95% of your full-time employees only. The healthcare coverage must also be affordable and meet minimum value standards.

Here’s the bottom line:

• You’re not required to offer healthcare benefits to part-time workers.
• But you are required to include their hours when calculating your ALE status.

How Part-Time Employees Affect Your ALE Status & ACA Compliance

Even if your part-time employees don’t qualify for health insurance, they still matter when it comes to ACA compliance. Part-time employee hours count toward your total full-time equivalent (FTE) employees. An FTE, or full-time equivalent, is a way to account for part-time employees by converting their combined work hours into the equivalent number of full-time employees. This matters because when determining ALE status, the IRS doesn’t just look at how many full-time employees you have—they look at your total workforce, including the hours worked by part-time staff.

To calculate ALE status:

1. Calculate the total monthly hours worked by all part-time employees (employees who work less than 30 hours/week).
2. Divide that total by 120 to get your full-time equivalent (FTE) count.
3. Now, count the number of full-time employees (employees who work 30+ hours/week).
4. Add your total FTEs with your full-time employees. If the number is 50 or more, you’re an ALE.

Example:

You have 35 full-time employees and 30 part-time employees who each work 60 hours/month.

• 30 part-time employees × 60 hours = 1,800 hours per month
• 1,800 ÷ 120 = 15 FTEs
• 35 full-time + 15 FTEs = 50 employees → You are now an ALE.

If you're an ALE and fail to offer required coverage to your full-time team, you could face ACA penalties, even if those part-time employees don’t receive benefits.