An applicable large employer must offer its full-time employees affordable health coverage or pay a penalty. Employers have two options for counting their employees’ hours to determine full-time status.
Employers with a variable hour workforce will likely use the Lookback Method for determining if an employee should be considered a full-time equivalent employee and offered health coverage. Using this method allows an employer to treat an employee consistently for a set period and not worry about offering and rescinding coverage throughout the plan year.
An hour of service is each hour an employee is paid or entitled to payment. For hourly employees, hours are counted by records of actual hours worked. For non-hourly employees, hours may be calculated using one of the following options:
An employer is not required to use the same measurement period for all employees. The employer may apply different measurement methods for different reasonable classifications of employees.