In the realm of health care reform, employers using the look-back measurement method to determine full-time status may face uncertainties when it comes to handling newly hired employees. This article provides valuable insights and guidelines on how to treat new hires in ACA calculations, catering specifically to Human Resources professionals.
For employers who hire individuals into full-time positions with a reasonable expectation of their full-time status, it is crucial to note that these newly hired employees must be offered health coverage no later than the first day of the fourth calendar month following their hire date. Despite their full-time classification, employers must count these employees’ hours for ACA calculations. Once an employee completes a full standard measurement period, they become an "ongoing employee," and the regular look-back measurement method applies to determine their full-time status.
In the case of new employees hired for part-time and variable hour positions, where full-time employment is not necessarily expected, the following rules apply:
The initial measurement period should span at least three and no more than twelve consecutive calendar months, starting from any date between the employee's hire date and the first day of the first calendar month after their hire date.
The stability period for variable hour employees should be of the same duration as for ongoing employees. If the employee calculates as full-time during the initial measurement period, the stability period commences immediately after the initial measurement period and any administrative period. It lasts for the longer of either (a) six consecutive months or (b) the length of the initial measurement period. If the employee does not calculate as full-time during the initial measurement period, the stability period cannot exceed one month longer than the initial measurement period and must not exceed the remainder of the standard measurement period (including the administrative period) in which the initial measurement period ends.
While the administrative period may extend up to 90 days, it should not surpass the last day of the first calendar month that begins on or after the first-year anniversary of the employee's hire date when combined with the initial measurement period.
For newly hired employees, employers must track and apply hours for two distinct purposes: the new hire measurement period and the standard measurement period. This ensures accurate assessment of full-time status during the applicable periods.
Once a new employee has completed a full standard measurement period, they become an ongoing employee and must undergo testing for full-time status based on the hours worked during that standard measurement period. It is important to note the following scenarios:
Understanding the intricacies of health care reform, particularly in relation to calculating full-time status for newly hired employees, is vital for employers utilizing the look-back measurement method. By adhering to the guidelines provided in this article, Human Resources professionals can ensure compliance with ACA offer of coverage requirements and make informed health coverage decisions.
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