Health insurance eligibility depends on your settings 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. This does not depend on carrier contracts.
You can use these statuses for both types of benefits. Be aware of what each status means for health insurance.
Employees who work 30 hours or more each week are typically eligible for health benefits under the Affordable Care Act (ACA). This can vary based on state laws and your company’s policies.
Employees who work fewer than 30 hours each week may be eligible for health benefits. This depends on two things:
Your insurance carriers' rules
How you defined eligibility when you set up benefits with the carrier
This status is for employees with unpredictable working hours. You cannot determine if they work an average of 30 hours per week during the initial measurement period. Learn more about variable-hour employees below.
The number of hours worked determines if an employee qualifies for benefits. If an employee works unpredictable hours, they could be a variable-hour employee (VHE). However, if you can reasonably determine they will average more than the minimum hours for benefits, they are not a VHE.
Example: A restaurant has 5 employees with floating schedules. Hours vary week to week for each employee, but all employees work at least 20 hours per week (excluding approved vacation). Benefit eligibility starts at 20 hours or more per week. These employees are not VHEs because they work enough hours to meet eligibility requirements, even though their schedules vary.
Other factors to consider include:
Whether the employee is replacing a full-time employee
Whether employees in similar positions are full-time
Whether the job was advertised or documented as requiring more or less than 30 hours per week on average
Note: No single factor determines this classification, and other factors may apply. This is a complex classification. Use it carefully
Look-back period
This is the time period when you evaluate an employee’s average hours worked. You use this to determine eligibility. If they work over 20–30 hours (depending on your state and insurance contracts), they may qualify for benefits.
Note: Customers with Gusto benefits have a 12-month look-back period
Stability period
If a variable-hour employee qualifies for benefits based on their look-back period hours, they can participate in the company benefits during the stability period. They keep coverage regardless of hours worked during that stability period. The stability period is the same length as the look-back period.
Example: If the look-back period is 12 months and the employee qualifies for benefits, they get coverage for the next 12 months. These 12 months of coverage also serve as their look-back period for the following year’s coverage.
Seasonal employees work in positions that last 6 months or less per year. They are not eligible for Gusto-managed benefits.
Note: Some states have different minimum-hour requirements. Your state’s requirements may vary. We recommend speaking with a licensed advisor about your needs.
Owners may be eligible to enroll in their company's small group health insurance. The insurance carrier may require proof of wages for owner eligibility. Owners who want to enroll must set up an employee account and classify the employee as an owner. This allows them to participate in the company's benefits package. This setup lets the owner access benefits information and participate in annual open enrollment through their Gusto account.
When Gusto manages your benefits, keep your teams' employment statuses up to date. Gusto will handle changes with the carriers.
Keep in mind: Only updating an employee to have regular full-time hours will not trigger an employment status change.
Timeline for eligibility changes
If you manage benefits internally, carriers have strict deadlines for processing new hire enrollments or terminations. Update employee statuses promptly to avoid processing delays or enrollment denials. Learn more about carrier enrollment deadlines.
View or update an employee's employment status (affects benefits eligibility)
To view or change someone's employment status:
Go to People.
Click the employee's name.
From the Work tab, scroll to the Benefits eligibility section and click Edit.
This section only appears if your company offers insurance through Gusto. It determines benefit eligibility. If you do not see it, try switching an employee to hourly, salaried, or commission, or managing their hours with time tracking.
Make the necessary changes based on the hours the employee works.
If an employee is newly eligible for benefits (ex: they went from part-time to full-time), they automatically receive an invitation to enroll 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 notifies the insurance carrier to remove them from coverage.
If Gusto manages your benefits, dismissing an employee also terminates their health benefits. Different rules may apply if the dismissal is temporary (such as a furlough).
You dismiss an employee when you do not expect them to return to work. You furlough or place someone on leave of absence when they take temporary leave and will return. Learn more below about how to handle each situation.
Once you dismiss an employee, they remain in your account under the list of dismissed employees. You will not be charged for them on your monthly Gusto invoice.
How benefits are affected
If the employee is enrolled in benefits through Gusto, their dismissal triggers termination of their coverage. Insurance carriers may take several business days to process terminations. Their last day of coverage depends on the termination policy with your insurance carrier. Check the Benefits section of your Gusto admin account for your termination policy. To avoid overpayment on your insurance invoice, dismiss the employee in your Gusto account as soon as possible. The insurance carrier processes any premium overpayment and credits it back to you the following month, if the carrier has processed the termination before generating the new invoice.
If your company must provide Federal COBRA or state continuation, the dismissed employee receives notification about how to continue their coverage, if they choose.
If your employee takes temporary leave, you can skip the employee on each payroll during their 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 counts as a missed deduction. When the employee returns to work, we apply deduction corrections to capture the deductions missed during their leave.
Keeping them active but skipping them on payroll keeps their benefits active while removing them from payroll.
Important: Carriers have different rules. Contact your carrier to learn how long an employee can keep health benefits while not actively working.