"How to Rock a Part Time Job". But benefit coverage is another matter

 That’s a picture from Episode 12, How to Rock a Part Time Job, that ran on the Nickelodeon sitcom, How To Rock, on  April 21, 2012.

In case you haven't seen the show, here’s the premise courtesy of Wikipedia:

The show centers on Kacey Simon (Cymphonique Miller), a popular girl who was once mean, and whose status goes down after she must briefly wear braces and glasses. Ignored by her fellow mean girls, Kacey finds a new way to express herself through music by becoming the lead singer of the pop/hip-hop band Gravity 4 with Stevie (Lulu Antariksa), Zander (Max Schneider), Nelson (Noah Crawford), and Kevin (Christopher O'Neal). The success of the band, now renamed Gravity 5, begins a rivalry with Kacey's former group The Perfs, a rival band featuring her former friends, and now archrivals Molly (Samantha Boscarino) and Grace (Halston Sage).

In the aforementioned Episode 12, Stevie helps Kacey gets a job at Danny Mango's so Kacey can pay her mom back for a large credit card bill. But when Kacie finds out that employees can get free smoothies, she gives too many away getting herself and Stevie fired.

Got it?

So kids, here’s the question. Other than free smoothies, are Kacey and Stevie covered under Danny Mango’s benefit programs?

In the new world of health care, it’s a relevant question. There’s much discussion now about the extent to which employers will move many of its employees to part-time status, i.e., the less than 30 hours a week threshold under the Affordable Care Act, so they would not be required to provide health insurance benefits.

Sarah Kliff, who does an excellent job covering health policy for the Washington Post, recently reported on this matter in her regular Health Reform Watch, Will Obamacare lead to millions more part-time workers? Companies are still deciding.

But from a retirement plan standpoint, there really isn’t much to decide. Many employers do not want to include part time employees for both cost and discrimination testing purposes. However, the IRS issued guidance in 2007 regarding the extent to which part-time, temporary, seasonal, and project employees can be excluded under qualified plans, including 401(k).

Plans that are improperly drafted to exclude part-time and other non–full-time employees or exclude them in actual operation of the plan can be disqualified resulting in significant adverse tax consequences.

So here are the takeaways for an employer concerned about this issue:

  1. Review both the plan document and plan operation to determine whether these employees were validly excluded from plan participation.
  2. Make any necessary corrections either to the plan document or corrective contributions  under an appropriate IRS correction program.

Now as to providing health insurance coverage for part-time employees. That's definitely a "kids don't try this home" issue. Talk  to an attorney experienced with health insurance.

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