The Affordable Care Act requires an applicable large employer to offer health coverage to its full-time employees or pay a tax penalty. A full-time employee is one who works 30 or more hours per week (130 or more hours per month). There are two methods for determining full-time status: the monthly measurement method and the look-back measurement method.
Under the Monthly Measurement Method, an employer determines each employee’s status as a full-time employee for a calendar month by counting the employee’s actual hours of service for that month. This method is useful for employees whose hours do not fluctuate throughout the year.
Under the Lookback Measurement Method, an employer counts the employee’s hours of service in one period (the measurement period) to determine the employee’s full-time status for a future period (the stability period). This method is useful for employees who are variable hour and whose hours of service fluctuate throughout the year.
Employers should pay attention to hours for purposes of offering employees health coverage in compliance with the ACA.