Health insurance eligibility is based on how you've set up benefits with your insurance carrier. Sign in to your carrier's employer portal or call your carrier to confirm your company's eligibility settings.
Commuter benefits eligibility is based on how you've designed your company's benefits package internally (not dependent on carrier contracts).
You can use these statuses for both types of benefits, but be cautious of the status implications specifically for health insurance.
Full-time
Employees who work 30 hours or more in a week are always eligible for health benefits. In some states, employees who work 25+ hours are considered to be full-time—you can see your company's settings when choosing someone's benefits status.
Part-time
Employees who work fewer than 30 hours in a week may be eligible for health benefits, depending on two things: the insurance carriers' rules and how the company chose to define eligibility when setting up their benefits with the carrier.
Variable (hours vary every week)
Employees who have unpredictable working hours and the employer can’t determine if the employee will work an average of 30 hours per week based on the initial measurement period. Click the accordion below to learn more about how variable hour employee are classified.
The number of hours worked is a determining factor for whether or not the employee is eligible for benefits. If an employee works unpredictable hours they could be considered a variable hour employee (VHE). However, if they work unpredictable hours but an employer knows that they will work on average more than the minimum hours for benefits eligibility, then they are not a VHE.
Example: A restaurant has 5 employees who work floating schedules. While hours from week to week may vary for any given employee, all employees are expected to work at least 20 hours per week (excluding approved vacation, etc). Eligibility for benefits is 20 hours or more per week. This means the employees are not VHEs because while they work unpredictable hours, they’re still working enough to meet the eligibility requirements.
There are a number of other factors to consider, including but not limited to:
Note: No single factor is determinative, and other factors may be considered. When in doubt, remember that this is a tricky classification. Use it sparingly.
Look-back period
This refers to the designated period of time when the employee will be evaluated for average hours worked in order to determine eligibility for benefits in a future stability period. The employer will look back on the employee's hours to figure out the employee's eligibility. If they work over 20–30 hours (depending on the state and contracts with the insurance company), they may be eligible for benefits.
Note: Customers who have benefits with Gusto will have a 12-month look-back period.
Stability period
If a variable hour employee is deemed eligible for benefits according to the hours worked during the look-back period, they’ll be able to participate in the company benefits during the stability period regardless of the number of hours worked during that subsequent stability period. The stability period is the same amount of time as the lookback period.
Example: If the look back period is 12 months and the employee is deemed eligible for benefits, the employee will be entitled to have coverage for the following 12 months. The 12 months during which the employee is covered will simultaneously serve as the employee’s lookback period for coverage the following year.
Note: Customers who have benefits with Gusto will have a 12-month stability period.
Seasonal employee
Seasonal employees—who are hired into a position that will last 6 months of the year or less—are not eligible for Gusto managed benefits.
Note: Some states have minimum hour requirements that differ from the numbers above. Your specific state’s requirements may vary. We recommend reaching out and speaking with a licensed advisor to discuss your needs.
Owners
Owners may be eligible to enroll in their company's small group health insurance. The insurance carrier may require proof of wages in order for an owner to be eligible. Owners who want to enroll must set up an employee account and classify the employee as an owner so they can participate in the company's benefits package. This setup and classification is required so that the owner can access benefits information and participate in annual open enrollment through their Gusto account.
When your benefits are managed by Gusto, keep your teams' employment statuses up to date and Gusto will handle any changes with the carriers.
Keep in mind: Only updating an employee to have regular full-time hours will not trigger an employment status change.
If you have internally managed benefits, there are strict carrier deadlines on when an employee’s new hire enrollment or termination can be processed. Make sure you're updating employee statuses in a timely manner to minimize carrier processing delays or denials of the enrollment—learn more about carrier enrollment deadlines.
If an employee is newly eligible for benefits (ex: they went from part-time to full-time), they're automatically invited to enroll in coverage once their benefits waiting period is complete.
If the change makes the employee ineligible for benefits (ex. they went from full-time to part-time), Gusto lets the insurance carrier know to remove them from coverage.
If your benefits are managed by Gusto, dismissing an employee will also terminate their health benefits. Make sure to keep the employee active if they are not truly dismissed.
You would dismiss an employee who you do not expect to return to work. You'd furlough or put someone on a leave of absence if they're taking a temporary leave and are expected to return. Read more below on how to handle the two.
Once the employee is dismissed, they stay in your account under the list of dismissed employees but you will not be charged for them on your monthly Gusto invoice moving forward.
How benefits are affected
If the employee is enrolled in benefits through Gusto, their dismissal also triggers the termination of their coverage. Terminations with insurance carriers may take several business days to process. Their last day of coverage depends on the policy you have on file with your insurance carrier—check the Benefits section of your Gusto admin account for your termination policy. To avoid overpayment on your insurance invoice, make sure to dismiss the employee in your Gusto account as soon as possible. Any premium overpayment is processed by the insurance carrier and credited back to you in the following month, given that the carrier has processed the termination by the time the new invoice is generated.
If your company is subject to Federal COBRA or state continuation, the dismissed employee will be notified of the steps they can take to continue their coverage, if desired.
If your employee is taking a temporary leave, you can skip the employee on each payroll that they're on leave. You're still charged for skipped/furloughed employees on your monthly Gusto invoice.
How benefits are affected
If you have benefits, each skipped payroll is recognized as a missed deduction. When the employee returns to work, we'll apply deduction corrections to capture the deductions that were missed during the employee's leave.
Keeping them active but skipping them on payroll will make sure that their benefits remain active while removing them from payroll.
Important: Carriers’ rules differ—to be compliant, reach out to your carrier to find out how long an employee can keep their health benefits while they're not actively working.