Recently we’ve received several Ask the Expert questions from subscribers seeking guidance on health benefits coverage for workers on certain nonimmigrant visas. Is coverage required for H-1B workers? What about H-2B and F-1 workers?
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If you hire—or are considering hiring—workers on these or other nonimmigrant visas (i.e., workers who maintain a permanent residence outside the U.S. and who intend, at least initially, to be in the country on a temporary basis for work or education), you may have similar questions.
Is Coverage Required for H-2B workers?
Question: Is an employer required to offer health insurance to H-2B visa employees? I can find a DOL fact sheet that says H-1B visa holders must be offered health insurance, but I’m having a harder time finding clear guidance on H-2B visa holders.
Though this may seem like a simple question at first, this inquiry is quite complex because it depends on both U.S. immigration law and practices, as well as the requirements of the Affordable Care Act (ACA) and relevant tax and benefits laws.
With this in mind, let’s first talk about why H-1B workers are required to be offered health insurance, as this will help clarify the distinction between the categories of nonimmigrant workers.
Immigration law related to H-1B and H-2B visas. One of the requirements, as set by immigration law (See 20 CFR Secs. 655.700; 655.731), for an employer to hire an employee on an H-1B visa, is that the employer offer benefits (including not only health benefits, but also stock options, cash bonuses, paid vacations and holidays, life, disability, and other insurance plans; and retirement and savings plans) to those workers on the same basis that those benefits are offered to U.S. workers.
So, it is important to note that the requirement to offer health insurance to H-1B workers is not one that is rooted in the Affordable Care Act or other health benefits law. Rather, it is a requirement under immigration law that H-1B workers be offered the same benefits as equivalent U.S. workers. In fact, if equivalent U.S. workers do not receive health insurance, then the employer would not be required to offer those benefits to the H-1B workers.
With this in mind, the question is now whether immigration law has a similar requirement for H-2B workers.
It does not. In fact, the requirements for H-2B workers are almost the opposite of those for H-1B workers—when H-2B workers are hired, the employer is prohibited from offering those workers better benefits than those provided to its comparable U.S. workers. The employer may certainly choose to provide the same benefits to H-2B workers, but is not required to do so under immigration law.
So that covers immigration law—but we must also consider whether other laws require an offer of health benefits.
ACA ‘Play or Pay’. Before covering specifics for H-2B visa holders, let’s review and clarify the requirements of the Affordable Care Act (ACA). Employers often presume that the ACA requires employers to provide health insurance; however, as you may be aware, this is not the case.
Rather, the ACA requires covered employers to share healthcare responsibility by either providing coverage or paying penalties. So, the ACA does not require employers to offer or provide healthcare insurance to any employee, regardless of immigration status.
In short, the ACA also does not require you to offer health insurance to the H-2B visa holders (or any other worker). However, the important caveat is the fact that the decision not to provide health insurance to employees, including visa holders, could result in a tax penalty under the ACA “Play or Pay” provisions.
Do H-2B workers count as employees under the ACA? With that understanding out of the way, let’s now assume that the employer is an Applicable Large Employer (ALE) covered by the Affordable Care Act and that this employer wishes to avoid any “play or pay” penalties that may be incurred for failure to offer minimum essential coverage to any eligible employees.
So, the final question is whether H-2B workers can be considered eligible full-time employees for purposes of the ACA (and whether those workers can also trigger employer mandate penalties). The simple answer to these questions is yes.
Specifically, note that the ACA defines “employee” the same way as the term is defined in section 3(6) of the Employee Retirement Income Security Act: as “any individual employed by an employer.” And the ACA’s definition of full-time employee is someone who works an average of 30+ hours per week in a given month, or 130+ hours total in a given month.
So, if this worker meets the hours threshold under the ACA, the fact that he or she is a nonimmigrant visa holder doesn’t change an ALE’s obligations with respect to the employer mandate.
At this point, the analysis becomes fact and situation specific—how many hours does the employee work? Does the employee have his or her own coverage, or is he or she likely to seek coverage in the marketplace? Is it possible that the employee will be eligible for a premium tax credit/subsidy?
If the employer is an ALE under the ACA and needs to determine whether failure to offer coverage to these H-2B workers could result in penalties, then this is a good time to review the Play or Pay Decision Guide on HR.BLR.com®. Your benefits provider or tax professional may also be able to assist with the fact-specific Play or Pay calculations for specific workers.
Group plan eligibility. If, after this analysis, your company wishes to offer health coverage to these workers, then determining whether the H-2B workers would be eligible for your company’s health plan would also depend on the details and requirements set forth in your company’s summary plan description and would be best addressed by your company’s benefits provider/representative.
ACA marketplace eligibility and notice. Finally, regardless of whether employer-provided group health coverage is available or offered to the H-2B employees, H-2B workers are eligible to obtain individual health insurance coverage in the ACA (healthcare.gov) Marketplace if desired. Therefore, these employees should be provided with written notice of coverage/exchange options.
What About Student Visas, Such As the F-1?
Question: An employee is on an F-1 working visa; what is our obligation to offer health benefits?
The analysis here is very similar to that of the H-2B worker. As we understand, the ACA doesn’t require employers to provide health insurance; however, failure to offer coverage to an F-1 worker may also subject us to those same “Play or Pay” penalties.
So, once again, it’s time for the fact-specific calculation to determine whether penalties would be assessed (and whether it may be more cost effective to risk the penalties than to provide benefits coverage). How many hours does the F-1 employee work? Is he or she likely to seek coverage through an exchange? To qualify for a tax subsidy for that coverage?
Again, if the employer is an ALE under the ACA and needs to determine whether failure to offer coverage to the F-1 worker could result in penalties, review the Play or Pay Decision Guide on HR.BLR.com and consult with your benefits provider or tax professional for additional guidance and benefits design.
Finally, because F-1 workers are eligible to obtain individual health insurance coverage in the ACA (healthcare.gov) Marketplace, these employees should also be provided with written notice of coverage/exchange options.
Bottom Line
When multiple areas of law intersect—leave and disabilities, tax and benefits, and, as here, benefits and immigration—it is always prudent to recruit the assistance of qualified subject matter experts who can review the specific facts of your particular workplace and arrangement. In many cases the law can only provide general guidelines, to which savvy professionals must apply a healthy dose of best practices knowledge and common sense.
 Holly K. Jones, JD is a Senior Legal Editor for BLR’s human resources and employment law publications. She understands the existing and emerging needs and challenges of human resources professionals thanks to several years of experience managing, writing, and editing key legal and compliance publications for BLR. Prior to joining BLR, Ms. Jones worked for the Tennessee Legislature’s Office of Legal Services.
She graduated magna cum laude and Phi Beta Kappa with a BA in English Rhetoric and Writing, Political Science, and Psychology from the University of Tennessee in Knoxville, Tennessee, where she also received a 2001 Citation for Extraordinary Academic Achievement. She received her law degree from Vanderbilt University Law School and is licensed to practice law in Tennessee. Follow Holly Jones on Google+ Questions? Comments? Contact Holly at hjones@blr.com for more information on this topic |