The Affordable Care Act limits an employer’s discretion to classify a returning employee as a new hire or as a continuing employee. Now, an individual rehired after a break in service of less than 13 weeks is considered to be a continuing employee. An individual rehired after a break in service of at least 13 weeks is considered to be a new hire (26 weeks for educational organizations). The determination of whether an individual is a new hire or a continuing employee affects how an employer must evaluate the returning employee’s eligibility for health insurance benefits, and ultimately determines when the employer must offer coverage to avoid the risk of penalties under “Pay or Play.”
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