The Affordable Care Act (ACA) requires employers to offer affordable health insurance to full-time employees or face potential penalties. As an employer, it is important to know how to measure full-time status for ACA purposes.
What is Full-Time Status?
Under the ACA, full-time status is defined as working an average of at least 30 hours per week or 130 hours per month. Employers must offer health insurance to all full-time employees or face penalties.
Methods of Measuring Full-Time Status
There are two methods for measuring full-time status: the monthly measurement method and the look-back measurement method.
Monthly Measurement Method
Under the monthly measurement method, an employer calculates the number of hours worked by each employee on a monthly basis. Employees who work an average of at least 30 hours per week or 130 hours per month are considered full-time for the following month and must be offered health insurance.
This method is straightforward but can be difficult for employers with fluctuating work hours or seasonal employees.
Look-Back Measurement Method
The look-back measurement method is more complex but can be beneficial for employers with fluctuating work hours or seasonal employees. Under this method, an employer looks back at a defined measurement period (usually between 3 and 12 months) to determine if an employee was full-time.
If an employee worked an average of at least 30 hours per week or 130 hours per month during the measurement period, they are considered full-time for a subsequent stability period (usually 6 to 12 months) and must be offered health insurance during that stability period.
This method allows employers to average hours over a longer period, making it easier to comply with the ACA requirements for employees with fluctuating hours.
How to Implement Full-Time Status Measurement
Once an employer has chosen a method for measuring full-time status, they must implement it consistently and fairly for all employees. Here are some steps to follow:
- Determine the measurement and stability periods: Decide on the length of the measurement and stability periods and communicate them clearly to employees.
- Identify full-time employees: Use the chosen measurement method to identify which employees are considered full-time and must be offered health insurance.
- Offer health insurance: Offer health insurance to all full-time employees and provide them with the necessary information to enroll in the plan.
- Monitor hours: Continuously monitor hours worked by all employees to ensure compliance with the ACA requirements.
- Maintain accurate records: Keep accurate records of all hours worked and health insurance offers to prove compliance with the ACA requirements.
In conclusion, measuring full-time status for ACA purposes can be complex but is essential for compliance with the law. By choosing the appropriate measurement method and implementing it consistently, employers can ensure that they are offering affordable health insurance to all eligible employees and avoiding potential penalties.
BAS can help with your hours tracking and calculation of full-time status. For information about BAS’ ACA data collection and reporting services, contact your account manager or solutions@basusa.com.
