This is part 1 of a collection of topics that employers are asking about the most with respect to the ACA. Check in for a variety of crucial topics to keep you and your employees compliant and ready for the coming year.
Why are most organizations choosing the look-back method over the monthly measurement period?
An employer determines each on-going employee’s full-time status by looking back at the “standard measurement period” (a defined time period between 3 and 12 consecutive calendar months, as chosen by the employer.) The employer has the flexibility to determine the months in which the standard measurement period starts and ends, provided that the determination must be made on a uniform and consistent basis for all employees in the same category.
If the employer determines that an employee averaged at least 30 hours per week during the standard measurement period, then the employer treats the employee as Full-time during a subsequent “stability period,” regardless of the employee’s number of hours of service during the stability period, so long as he or she remains employed.
The stability period must be a period of at least six consecutive calendar months that is no shorter in duration than the standard measurement period used by the employer and that begins after the standard measurement period.
While a monthly measurement period is a simple process for employers who only employ full-time workers, it becomes much more complex as soon as part-time employees are thrown into the mix. The year-long reporting period is also much easier to administer and less confusing to employees than monthly, quarterly or even bi-annual measurement periods