June 25, 2025

ACA and Interns: When to Offer Health Coverage to Full-Time Intern Employees

Understand your obligations under the Affordable Care Act for interns working full-time, including exceptions, measurement methods, and common employer strategies.

Summary

Large employers must offer coverage to full-time interns after waiting period.
Full-time status is based on 130+ hours per month or 30 hours per week.
Seasonal intern exception may apply if internship is six months or less.
Offering different waiting periods can cause nondiscrimination testing issues.
Consult advisors to ensure ACA compliance and avoid potential penalties.

You’ve hired a couple of interns who will work full-time hours, but only for about four months. Are you at risk of Affordable Care Act (ACA) penalties if you decide not to offer them health coverage?

Summary

If your company is a large employer—meaning you averaged 50 or more full-time employees last year¹—interns working full-time are generally expected to be offered health coverage after the usual waiting period. Otherwise, you could face penalties under the ACA’s employer rules. There is a limited exception if you use the look-back measurement method to determine full-time status.

Are you a large employer?

Before deciding whether to offer coverage, you need to determine if you’re considered a large employer under the ACA. According to IRS guidelines, this means having 50 or more full-time employees (including full-time equivalents) on average during the previous calendar year¹.

If you meet this threshold, you are generally required to follow the ACA’s Employer Shared Responsibility rules, sometimes called “Pay or Play.” This means offering health insurance to your full-time employees and their dependents—or risk potential penalties.

There are two types of penalties that may apply:

One for not offering coverage to most full-time employees and their dependents²
Another for offering coverage that isn’t affordable or doesn’t meet minimum value standards

How to determine full-time status

According to the IRS, an employee is considered full-time if they work at least 130 hours per month (about 30 hours per week). The IRS allows two ways to measure this:

Monthly method: Count actual hours worked each month.
Look-back measurement method (LBMM): Average hours over a past period to decide if an employee is full-time for a future period.

You may use different methods for different employee groups, such as hourly vs. salaried or employees in different locations.

If you hire an intern expected to work full-time hours, you are generally expected to offer coverage by the first day of the fourth month after they start. This applies even if the internship is short-term⁴.

Seasonal employee exception

If you use the look-back measurement method, interns working full-time for six months or less during the same time each year might be treated as seasonal employees³. This means you may delay offering coverage until after an initial measurement period.

To qualify, the internship must:

Last six months or less
Start around the same time each year, such as summer or winter, to meet a seasonal business need

Keep in mind, this exception is fact-specific and you would need to demonstrate it applies if challenged.

Common approaches to interns and benefits

Here are some strategies employers use with interns and health coverage. Note that some may raise compliance concerns:

Hiring interns to work full-time and offering coverage after the standard waiting period. Many short-term interns decline coverage because of the limited assignment or existing coverage (like student plans).
Scheduling interns for 25 hours or less per week to keep them from becoming eligible for benefits.
Hiring interns for less than 90 days so they don’t complete the waiting period⁴.
Offering different waiting periods for different employee groups, which can cause issues with nondiscrimination testing if your plan is self-funded or uses a cafeteria plan⁵.
Choosing not to offer coverage to full-time interns and accepting the risk of ACA penalties if those interns get premium tax credits through the Health Insurance Marketplace. This risk may be low if internships are short.
Amending plan documents to exclude interns or other employee groups if you decide not to offer them coverage. Be sure to update all benefits communications accordingly⁶.
Remember, excluding certain groups can also raise nondiscrimination concerns⁵.

What this means for you

If you hire interns to work full-time hours, you are generally expected to offer them health coverage just like any other full-time employee—unless a specific exception applies. This helps you reduce the risk of potential ACA penalties.

If you’re unsure about your situation or how to apply these rules, it’s important to consult with your benefits advisor, legal counsel, or tax professional.

References

1 Large employer status is determined on an aggregated basis and includes all full-time employees of related companies as defined by IRS Sections 414(b), (c), (m), or (o). This means that employees of controlled groups or affiliated service groups are counted together for ACA purposes.

2 For the purposes of IRS Section 4980H(a), “substantially all” means offering coverage to at least 95% of an employer’s full-time employee population.

3 Seasonal employees are those hired into positions where customary annual employment is six months or less, and the employment period begins around the same time each year. Examples include ski instructors hired for winter or retail workers hired for the holiday season.

4 The ACA prohibits group health plans from applying any waiting period that exceeds 90 days after an individual is determined eligible for coverage. This aligns with the requirement to offer coverage by the first day of the fourth month following hire.

5 Nondiscrimination testing ensures that health plans do not favor highly compensated employees. Failure in Section 125 nondiscrimination testing generally results in highly compensated employees being taxed on premiums, while failure in Section 105(h) testing affects the tax treatment of benefits.

6 Employer plan sponsors have a fiduciary duty to act in accordance with plan documents. Regular review and updates of plan documents are important to comply with changing regulations and case law, and to minimize legal risks. Consulting employee benefits counsel may be necessary.

This content is for informational purposes only and does not constitute legal, tax, or accounting advice. Please consult your own legal, tax, or benefits advisors for guidance specific to your situation.