Health Plan - Employee Classification

[Guest sjlbenefits]

A client of mine is interested in hiring one person as both an independent contractor and as a part-time employee. The individual needs health coverage and will participant in the client's health plan. The plan defines "eligible individual" as any employee who works at least 24 hours per week and is included on the employer's regular payroll. The problem is that some, but not all, of the 24 hours to be worked by the individual per week will be "on call" hours such that he will only be required to work if he is called in by the client.

If the IRS challenges the arrangement and determines that the individual is not an employee, what are the risks and/or penalties for the health plan? Could the insurance company who provides stop-loss coverage to the plan seek reimbursement for claims paid by the Plan to this individual and his defendants? Are there any monetary penalties that can be assessed by the IRS for misclassification? The client is trying its best to make the arrangement work and believes that this individual will meet the IRS employee classification test.

I know that there is a lot of guidance available for the reverse situation (individual misclassified as an independent contractor), but I have not been able to find guidance on this situation.

Thanks.