Classifying an employee as a rehire must fall within the guidelines of the ACA. If any employee’s absence of service is 13 (26 for educational institutions) consecutive weeks or greater they can, at the employer’s sole discretion, be classified as a rehire and have their adjusted hire date reflect the day they returned to service. A rule of parity within the ACA also allows an employer to classified a returning employee as a rehire even if their absence was less than 13 (26 for educational institutions) consecutive weeks providing they had previously worked at least 4 weeks and their subsequent absence of service was greater than what they previously worked.
Now that we have the general rules, let us look at some specific questions and examples.
Q: How do I handle rehired employees if they were NOT on the insurance plan during their previous employment period?
A: If employees were not on the insurance plan when they left, you do not have to offer them coverage upon return. These employees will now be tested in their own initial measurement period.
Q: How do I handle rehired employees, if they WERE on the insurance plan during their previous employment period?
A: The rules here are not that simple. You have to honor the duration of the original stability period and offer them coverage if when they returned to service they are still in the original stability period from their previous employment period. You have to offer them access to health coverage only during this stability period and you have until the first day after their first three full months of return to do so.
If an employer tested an employee from 10/01/2014 to 09/30/2015 in a standard measurement period, the employee qualified and were offered coverage starting 01/01/2016. If they leave employment 02/15/2016 and are rehired 04/30/2016 then they qualify under their first stability period measurement. As an employer, I have to honor that offer and offer them coverage until 12/31/2016. I have three months from the day of return to offer the coverage.
If the employee was rehired after 09/30/2016 then, the employee is outside of the first measurement period from the previous employment period and falls into an initial measurement period. Keep in mind; they are still in their 12-month stability period until 12/31/2016. Since you have until the first day after their first three full months of return to re-offer coverage, they would then fall out of the stability period and have to go through another initial measurement period.
Q: What if an employee left and were on the insurance and now are rehired but are not on the insurance this time?
A: If the employee was on the insurance and when they returned they were still in the original stability period you need to offer them coverage. If they are in a stability period when they were rehired the employer has to offer them coverage that will begin no later than the first day after their first full months of return.