Interns & Temporary Employees – Do They Have to Be Offered Benefits?

Employers often assume that an offer of coverage is not required for short-term or temporary positions, but that is not always the case. Whether an employer is hiring summer interns, hiring seasonal employees to keep up with increased demand at a certain time of year, or hiring to temporarily fill a position while another employee takes a leave of absence, these employees are often expected to work full-time hours, and therefore the question arises – does the position require an offer of coverage? To answer this question, three factors must be considered:

• Is the employer an applicable large employer (ALE)?
• If the employer is an ALE, are they utilizing the look-back measurement method or the monthly measurement method?
• If the employer is an ALE utilizing the look-back measurement method, are the temporary employees considered seasonal under §4980H?

Small Employers

For a small employer (i.e., has fewer than 50 full-time equivalents and thus is not an ALE), there is no obligation to make an offer of coverage to temporary employees. Small employers have broad flexibility to design benefit eligibility rules as desired, subject to any applicable state law. That being the case, small employers who utilize temporary employees and would prefer not to offer coverage to them should ensure that their plan eligibility rules specifically exclude that category of employees. Otherwise, a temporary employee otherwise meeting the plan eligibility requirements (e.g., working 30 or more hours per week) could argue that they are entitled to an offer of coverage.

Applicable Large Employers (ALEs)

ALEs (50 or more full-time equivalents) have to be a little more careful, at least in regard to their group medical plan. For benefits other than major medical, the employer could choose to handle eligibility rules as suggested above for small employers; however, the employer risks §4980H penalties if temporary employees are full-time and are not offered medical coverage. Whether temporary employees are considered full-time for §4980H purposes may depend on whether the employer is using the monthly measurement method or the look-back measurement method. Keep in mind that the method chosen must generally be used for all employees, or at least all hourly employees (it is possible to differentiate methods between hourly and salaried employees).

If an ALE Is Using the Lookback Measurement Method…

Temporary employees that meet the §4980H definition of “seasonal” (see below) may be subject to an initial measurement period of up to 12 months, which prevents them from ever being considered full- time. Either they will not average enough hours to be considered full-time over the entire initial measurement period, or they will terminate employment prior to the beginning of the associated stability period. But temporary employees who do not meet the definition of seasonal and are expected to average full-time hours require an offer of medical coverage after the plan waiting period to avoid incurring potential penalties under §4980H.

Seasonal Employee

§4980H defines a “seasonal employee,” as an employee in a position for which the customary annual employment is 6 months or less. The reference to customary means that by the nature of the position, an employee in this position typically works for a period of 6 months or less, and that period should begin each calendar year in approximately the same part of the year (such as summer or winter). In other words, if an employer hires temporary employees throughout the year to help with projects as needed, or hires temporary employees who typically work beyond 6 months, then those employees cannot be classified as seasonal.

If an ALE Is Using the Monthly Measurement Method…

For employers utilizing the monthly measurement method, any employee (including temporary employees) is considered full-time if they achieve 130 or more hours of service per month. If a temporary employee is expected to average full-time hours, even on a short-term basis, an offer of medical coverage is required after the plan waiting period to avoid potential penalties under §4980H.

Penalty Risk for ALEs

An ALE can avoid the bigger §4980H(a) penalty if coverage is offered to 95% or more of full-time employees each month. So, if temporary employees are full-time (and not considered seasonal for employers using the lookback measurement method) and not offered medical coverage, the employer could face a penalty under §4980H(a) if temporary employees make up 5% or more of the total full-time employee count during any particular month. A penalty under §4980H(a) is calculated monthly as follows for 2026 – (full-time employee count – 30) x $278.33.

Even if the temporary employees make up less than 5%, the employer is still at risk for the §4980H(b) penalty at a cost of $417.50/month (in 2026) for each full-time temporary employee who is not offered medical coverage and enrolls in subsidized coverage through a public Marketplace.

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