Benefits for part-time employees reduces talent gap for SMBs

Recruiting, engaging and retaining talent, especially since the pandemic and the “great resignation,” continues to be a top concern for business leaders. Mineral’s 2023 State of HR Report revealed that 87% of small and medium-sized business (SMB) leaders view retaining and engaging employees as the most critical HR initiative for company success, while 57% say attracting new talent is the most crucial. Hiring and retention issues have particularly been a reality for industries like hospitality, manufacturing, and retail that rely on part-time and variable-hour employees. Restaurants continue to operate with reduced hours and dining, and display signs asking for patience due to a shortage of workers. The recruiting shortfall creates a domino effect, hitting consumers with fewer options and saddling businesses with lost revenue, forming a vicious cycle.

One obvious solution to the talent shortage is higher wages, which is not an option for every business. What do current and potential employees want besides wages? Year-over-year benefits rank among the top five factors for job seekers. Could providing benefits to part-time employees reduce the talent gap, and how can SMBs do that?

Option one: ICHRAs

The introduction of the individual coverage health reimbursement arrangement (ICHRA) in 2020 created an option for employers to help employees pay for individual health insurance premiums and/or reimburse eligible medical expenses. The flexibility in an ICHRA allows employers to tailor the plan eligibility requirements to meet their organizational needs, like carving out part-time employees as a designated class to offer them the benefit. Employees offered an ICHRA cannot be eligible for an employer’s traditional health plan, and they can opt out of an ICHRA if they prefer to apply for a tax credit (subsidy) on the Marketplace. An employer may sponsor an ICHRA for part-time workers and a traditional benefit plan for full-time workers.

Option two: Lower threshold for eligibility

Employers may also consider reducing the hours worked criteria for employee benefits eligibility after consulting with their insurance carrier. The Affordable Care Act (ACA) established the minimum number of hours as 30 hours of service (on average) per week to receive a full-time status. That doesn’t mean an employer cannot choose a lower number, but means they cannot select a number higher than 30.  A help wanted ad may get more applicants if it discloses benefits are available at 20 hours per week.

Option three: MEC plans

Minimum essential coverage (MEC) plans are not as robust as traditional plans and generally provide coverage for primary care doctors and specialists, urgent care clinics, some diagnostic services, and generic drugs. MEC plans may be a solid option for part-time employees who do not meet their employer’s eligibility criteria for traditional benefits. Large employers subject to the Affordable Care Act will need to continue to be mindful of monitoring part-time employees who may be deemed full-time based on their hours of service.

Read more: Boosting financial health benefits in the small business workplace

These are only three potential options for providing some benefits to part-time workers. Each option has compliance obligations under various laws, and each won’t be a fit for every business, but they may be worth investigating. The best advice is to discuss these options with an insurance broker who is skilled at helping you create a strategy that best suits your specific challenges and needs, especially when you need a customized solution.