Educational Exception for ACA Calculation

Posted by BAS - 26 May, 2022

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Many teachers and other employees of educational institutions do not work during the summer and might not have hours to contribute to an average monthly hour calculation. If not structured properly, missing hours over the summer months could result in a teacher being calculated as not-full-time and not offered health coverage. The Affordable Care Act addresses summer employment with an “educational exception” allowing employees of educational organizations to not be penalized if they don’t have working hours during the summer.

An educational organization may take advantage of special break in service rules under health care reform. An “educational organization” is an entity whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and has a regularly enrolled body of pupils or students in attendance at the place where educational activities are regularly carried on. 

Since educational organizations have extended break periods when classes are not in session and employees do not perform services, the ACA rules take this into account when determining full-time or not-full-time status.

Educational Organizations have special rules for determining when an employee on a break returns to work and can be considered a new employee- 

  • An employee who has a break of service of 26 or more consecutive weeks may be treated as a new employee. The rule for non-educational organizations is 13 weeks.
  • If an employer wants to use a break period of less than 26 weeks, the employer may treat an employee as a new employee if the period in weeks during which no services are preformed is at least 4 weeks long and not longer than 26 weeks and exceeds the number of weeks of employment immediately preceding the break.

Educational Organizations may not reduce an employee’s hours worked during a break period. Instead, they are directed to use an averaging rule to count hours during employment break periods-

  • The employer may determine average hours of service by excluding any employment break period occurring during a measurement period and applying the average for the entire measurement period.
  • The employer may impute hours of service for the employment break period at a rate equal to the average weekly hours of service for weeks not part of the employment break period.

Educational Organizations should pay close attention to the break rules when determining if an employee should be considered full-time or not full-time for ACA purposes.

BAS’ Affordable Care Act data collection and reporting service can help you navigate the educational exception break in service rules. For more information, contact your account manager or ACA-Services@BASusa.com.

Topics: Health Care Reform (ACA), Affordable Care Act, HR & Benefit Plans, HR & Benefits News


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