Simplify ACA Reporting with Our Affordable and Accurate Solution
For many organizations, particularly those in retail, hospitality, healthcare, and education, variable-hour employees represent a significant portion of the workforce. These employees work schedules that fluctuate from week to week, making it challenging to determine whether they qualify as full-time under the Affordable Care Act's employer mandate. The stakes are high as misclassification can lead to significant penalties, while overly conservative approaches may create unnecessary benefit costs.
Understanding the Look-Back Measurement Method
The IRS recognizes the challenge of classifying variable-hour employees and offers the look-back measurement method as a solution. This approach allows employers to measure employees' hours over a defined period (typically 3-12 months) to determine their status for a subsequent stability period during which that status remains fixed regardless of actual hours worked.
While conceptually straightforward, implementing this method requires careful planning and consistent execution. Organizations often struggle with determining appropriate measurement periods, tracking hours accurately across different payroll systems, and managing the administrative complexity of staggered measurement cycles.
Selecting Optimal Measurement Periods
The selection of measurement period length involves balancing competing priorities. Shorter periods (3-6 months) allow more responsive classification but create more frequent administrative cycles. Longer periods (9-12 months) provide greater stability but may delay coverage eligibility for employees whose hours increase.
Many organizations find that a 12-month measurement period offers the best compromise, providing a comprehensive view of work patterns while minimizing administrative burden. This approach is particularly effective for industries with seasonal fluctuations, as it captures both busy and slow periods.
The standard measurement period should align with your benefits plan year when possible, with administrative periods structured to allow sufficient time for enrollment processing. Consider establishing the measurement period to end approximately two months before your plan year begins, providing adequate time for eligibility determination, notifications, and enrollment.
Streamlining Tracking with BAS
The foundation of compliant measurement periods is accurate hour tracking across all compensable time. BAS specialized ACA data collection services allow you to update data from existing payroll systems to capture regular hours, overtime, paid time off, and other special categories.
For organizations with multiple timekeeping systems or locations, BAS’ consolidated reporting provides a single source of truth for ACA compliance. Their platform handles the complex calculations required for educational institutions, union employees, and other special circumstances that often create compliance challenges.
Handling Status Changes and Documentation
When employees transition between variable-hour and regular full-time positions, clear policies prevent coverage gaps and compliance issues. BAS’ tracking system flags these changes automatically, ensuring proper handling during transitions.
Documentation remains essential for defending ACA compliance during potential audits. BAS’ reporting platform maintains comprehensive records of:
- Measurement period definitions for each employee category
- Detailed hours calculations with audit trails
- Coverage offer evidence and enrollment records
- Employment status changes and resulting benefit actions
Moving Beyond Basic Compliance
Organizations partnering with BAS gain not just compliance tools but strategic workforce insights. Their analytics identify departments or positions with high rates of variable-hour employees crossing into full-time status, enabling more effective workforce planning.
BAS’ ACA specialists conduct periodic compliance reviews, identifying potential blind spots before they become significant problems. This proactive approach helps organizations transform ACA compliance from a regulatory burden into a strategic advantage.
Conclusion
Effective measurement period practices require both sound strategies and reliable systems. By establishing clear measurement periods and leveraging BAS’ specialized ACA services, organizations can confidently navigate variable-hour employee classification while gaining valuable workforce insights.
Rather than building complex tracking systems internally, partnering with BAS allows HR teams to focus on strategic initiatives while ensuring ACA compliance through tested methodologies and purpose-built technology. For organizations seeking both compliance confidence and administrative efficiency, BAS provides the ideal solution for variable-hour employee management under the ACA.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
