Editor’s note: This article was edited for length from an original article provided by the Florida Fruit and Vegetable Association. It’s a complicated issue, but this article just might help. The article cannot substitute for the advice of your own legal and tax professionals.
H-2A guest workers have become an integral part of many agricultural operations. As growers prepare for complying with the healthcare reform employer “play or pay” mandate in 2015, there appears to be no shortage of conflicting information about the extent to which healthcare reform applies to guest workers.
Below are answers to a few frequently asked questions:
Do guest workers “count” for purpose of healthcare reform?
Yes. The rights and obligations set forth in healthcare reform generally apply to all U.S. citizens and individuals who are lawfully present in the U.S. Guest workers "count" for purposes of the various rights and obligations under healthcare reform. There are no explicit exceptions for guest workers.
Are guest workers subject to healthcare reform's individual mandate?
Yes. Beginning in 2014, all U.S. citizens and individuals lawfully present in the U.S. must maintain minimum essential health coverage or else pay a penalty tax. In 2014, the annual penalty tax is generally $95 or, if greater, 1 percent of the individual's household income above the tax return filing threshold. For 2015 and 2016, the annual penalty amounts / income percentages increase to $325 / 2 percent and $695 / 2.5 percent, respectively.
For 2017 and beyond, the annual penalty will increase based upon increases in the cost of living. One-twelfth of the annual penalty tax will be imposed for each month during which an individual does not maintain minimum essential health coverage. For each month during a guest worker is lawfully present in the U.S., the guest worker will be subject to the individual mandate penalty tax if he or she does not maintain minimum essential health coverage during such month. The penalty tax will be imposed and paid when the guest worker files his or her federal personal income tax return.
Can guest workers buy health insurance coverage through the government insurance exchanges?
Yes. Exchange coverage is available to all U.S. citizens and individuals lawfully present in the U.S. If a guest worker is expected to have U.S. household income of not more than 400 percent of the applicable federal poverty level, the guest worker should be eligible for tax subsidies to help cover the cost of exchange coverage.
Do guest workers “count” as employees for purposes of the employer mandate?
Yes. There are no blanket exceptions for guest workers. The employer mandate applies to all full-time employees. The issue with respect to guest workers is whether they will qualify as “full-time employees,” given the limited and temporary nature of their work.
May guest workers be disregarded if they are seasonal employees?
Generally, no. Most guest workers performing seasonal agricultural work will be considered “seasonal employees” for purposes of the employer mandate. This does not mean that guest workers may be disregarded for purposes of the mandate. The “seasonal employee” concept is relevant for two distinct purposes with respect to the Employer Mandate.
First, there is the “seasonal worker” exception to the “50 or more full-time employees test,” which looks at an employer’s average number of full-time employees and full-time equivalents, or FTE, during a calendar year to determine whether the employer will be subject to the employer mandate in the following calendar year.
If an employer’s workforce exceeds 50 full-time employees and FTEs for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were “seasonal workers,” then the employer mandate will not apply in the following calendar year, regardless of whether the employer averaged 50 or more full-time employees and FTEs across the entire measurement year.
In most cases, guest workers performing seasonal agricultural work will be considered “seasonal workers.” Guest workers could assist an employer with avoiding the employer mandate by satisfying the “seasonal worker” exception to the “50 or more” test. Guest workers are not simply disregarded for purposes of the “50 or more” test.
Second, once an employer is subject to the employer mandate, the obligation to “play,” or offer adequate and affordable group health coverage, or “pay,” pay a penalty tax for failing to offer such coverage, applies only to “full-time employees.” In some cases, the seasonal nature of the work performed by guest workers may prevent them from qualifying as “full-time employees” for purposes of the employer mandate. Guest workers are not simply disregarded for purposes of determining which employees qualify as “full-time employees.”
For more information or the full article, contact the Florida Fruit and Vegetable Association.
Blumling is a partner in Fisher & Phillips LLP.
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