This taxpayer works in the nuclear power plant shut down industry. The jobs are full time but not permanent. The income is reported on a W2 with federal & state taxes withheld but no benefits. The employee receives a per diem in addition to wages. The current job location is in Arizona. The taxpayer is a NC resident.
The corporation says they do not have to offer health insurance due to the person being contract labor. Based on the above facts, is this correct?
Per Diem employees can be considered full-time employees under the ACA if the work over 30 hours on average a year. Employers can use a look-back period of up to 12 months and reasonable methods of crediting hours to determine eligibility of full-time employees for health insurance. If an employee works more than 30 hours a week on average (or 28 as a safe harbor) they must be offered coverage as long as they maintain full-time status.
to be clear, the rule above applies to almost every type of employee, including per diem employees, although there are a few types of employees to whom extra rules apply (see below).
With that said, it is important to note that look back periods and measurement periods can be somewhat complex, and employers have some flexibility as to the length of the measurement period used.
On one hand employers use the above methods to determine if they have to comply with the mandate. On the other hand they use these methods to determine if an employee must be offered coverage.
Contract labor, adjunct teachers, traveling salesmen, airline pilots, and other professions which have harder hours to count are trickier to get right. Still the above rules apply.
We break down all of these topics on our very detailed, albeit slightly heady employer mandate page, but the excerpt you would be looking for is:
"Seasonal employees, contractors, volunteers, educational employees, services provided by student work-study programs, adjunct faculty, and business owners either don’t count toward the total or count toward the total differently. For those who do count toward the total, employers should use a reasonable method of crediting hours of service that is consistent with section 4980H of the IRS tax code."
Generally there is just a fine line between being a "contractor" and an employer using "contractor" status to avoid payroll taxes and providing benefits. Nothing you stated above specifically says you must be one or the other. Check out this article from the Department of Labor. We will collect more facts on this to help better educate people moving forward. Feel free to post more findings below.
TIP: For more information on Per Diem and the ACA, see https://www.healthcareexchange.com/article/diem-employees-and-aca-mandates