Tips About Measurement Periods Under the ACA

Tips About Measurement Periods Under the ACAMany employers struggle with the Affordable Care Act (ACA) and measurement periods that define the status of full-time employees and their health coverage. 

The ACA (also known as Obamacare) requires that ALEs offer group health insurance for each of their full-time employees. If the employer fails to provide health insurance to even one full-time worker, and the worker receives a government subsidy for insurance, the IRS can assess a penalty to the employer. In order to avoid penalties, you have to provide group health insurance to all employees who fit the definition of a “full-time worker.” Here are a few tips on how you can avoid an IRS penalty when it comes to full-time group health insurance.

The Two Methods

  1. Monthly Method – You can count the employee’s monthly hours to determine if the employee matches the definition of full-time. If they do, you best provide group health insurance.
  2. Look-Back Method – Count the employee’s hours over a fixed period of three to twelve months to determine if your employee fits the full-time description. Employees that average 30 hours or more per week during this look-back period must provide coverage for the entire corresponding stability period.

Tips for Measurement Period

  1. Starts at the Hire – The employer will not be penalized for not providing coverage during the first three months after hire as long as the employer provides coverage at the beginning of the fourth month.
  2. Leaves of Absence Can Be Special – Under the monthly method, paid time off is counted as hours of service, while unpaid hours do not count. Look-Back Method provides special cases like family and medical leave, uniformed services leave, reemployment leave, and jury duty.
  3. Look-Back Is Optional – You do not have to do the Look-Back Method.

Contact the experts at Colorado Nonprofit Insurance Agency, part of HUB International in Denver, Colorado at 303-894-0298. We will work with you to ensure you are getting the most out of your coverage.