It is prime time of the year for hiring “interns.” With the Affordable Care Act ’s “pay or play” rules scheduled to go into full swing next year for large companies (50+ employees), employers have to know how to treat interns.

The federal tax code imposes special taxes on large employers if their employees receive premium tax credits for the purchase of their own health coverage on one of the health care exchanges. We won’t repeat all the pay or play rules here but suffice it to say that avoiding the taxes hinges on offering group health coverage to “full-time employees.”

Regular, full-time employees (generally 30+hours/week/month) have to be offered coverage within 90 days of hire (with a possible one-month extra “orientation period”). Most other employees don’t have to be offered ACA-compliant coverage until after nearly a year and then only after the employer determines that the employee during that period averaged 30+ hours/week/month. This is under the “look back measurement period” of the ACA rules. So how does an intern fit into these rules?

An intern usually is hired to work a full-time schedule, at least for part of the year. Does that mean the intern has to be offered coverage within 90 days? Likely not, but the details are critical.

First, if an intern properly is not receiving payment for the work, then the intern essentially would not be counted as an employee because the 30 hours/week threshold is with reference to hours for which the worker is paid, or entitled to payment.

Second, for educational organizations, hours of service performed by students in positions subsidized through a federal or state work study program do not count.

Seasonal Employees

Now we start to drill down into the definitions under the ACA. A “seasonal” employee has to be considered only after nearly a year of work. A seasonal employee is one hired into a position for which the customary annual employment is six months or less and that period should begin each year at about the same time, such as summer or winter. If your company hires interns only for summer work, then they should fit the “seasonal” employee category.

Variable Hour Employees

If interns are hired for more than summer work – for instance, for a few weeks during semester breaks – they still may fit into another category where the worker’s status has to be evaluated only after almost a year of work. That’s a “variable hour” employee, which is one where the employer “cannot determine whether the employee is reasonably expected to be employed on average at least 30 hours of service per week” during that first year because “the employee’s hours are variable or otherwise uncertain.” An intern who may work full-time in the summer but then sporadically during the year likely fits this category (in some weeks the employee will work 40 hours, other weeks he or she works 0 hours).

So, if an intern is a seasonal or variable hour employee, what then? You have to review that employee’s status after nearly a year (you choose the period) and average the intern’s hours. It’s likely that the intern won’t have averaged 30+hours/week/month. It’s also likely that the intern won’t be employed then, and the employer doesn’t need to worry about offering health coverage to the intern unless he or she is hired into a regular full-time position.

There is a 2014 complication. This year, the nearly year-long period to determine an employee’s full-time status may be shortened to as few as six months, as part of the transition to full pay or play rules. This shortened period may make more interns, and other employees, full-time than if you could wait almost a year to count hours. But if the employee isn’t employed at the next open enrollment, then you don’t have to extend coverage to him or her. If the employee is employed at that time, coverage will have to be offered.

Now is the time to plan for the pay or play rules. Knowing how to treat your interns is part of the overall process.