Understanding the Look-Back Measurement Method for Calendar Year Health Plans

As employers prepare for the upcoming open enrollment season, it is important to ensure that full-time employees, especially those with variable schedules, are offered appropriate health coverage under the Affordable Care Act (ACA). One common approach for determining full-time status is the Look-Back Measurement Method. This method allows employers to track employee hours over a fixed period of time and make coverage decisions based on those results.

What Is the Look-Back Measurement Method?

The Look-Back Measurement Method is an ACA-approved option for determining whether variable-hour, part-time, or seasonal employees are considered “full-time” for health coverage purposes. A full-time employee, under the ACA, is defined as someone who averages at least 30 hours per week or 130 hours per month.

Instead of assessing hours on a month-by-month basis, the look-back method allows employers to evaluate employee hours over a longer period helping to smooth out fluctuations and reduce administrative burdens.

How the Timeframes Work

This method includes three key periods: a measurement period, an administrative period, and a stability period.

1. Measurement Period: The employer tracks hours worked by employees to determine their average hours of service.
   • Employers may choose different start and end dates, but the period must be between 3 and 12 months.
   • Some calendar-year plans find that running this period from October 15 to October 14 of the following year works well.
2. Administrative Period: This short window is used to review measurement results, notify employees of their eligibility, and facilitate enrollment.
   • This period cannot exceed 90 days.
   • Some calendar-year plans run their administrative period from October 15 to December 31.
3. Stability Period: If an employee is determined to be full-time based on the measurement period, the employer must offer coverage throughout this stability period—regardless of changes in their hours.
   • For calendar-year plans, this usually runs January 1 to December 31 of the next year, consistent with the plan year.

Employers using the look-back method should consistently apply these periods and maintain clear documentation.

Why This Matters for Fall Enrollment

As you prepare for January 1 plan renewals, this fall is the time to:

• Review the hours worked during the measurement period to determine which employees are considered full-time.
• Notify eligible employees during the administrative period and provide enrollment instructions.
• Offer coverage for the entire stability period (the upcoming plan year) to employees who qualify as full-time.

This method is especially useful in industries with fluctuating workloads, such as retail, education, or hospitality. It allows employers to avoid the compliance risk of misclassifying employees and helps ensure that offers of coverage are made to all ACA-defined full-time employees.

Final Reminders

• Make sure your measurement and stability periods are clearly documented in your plan records.
• Ensure accurate hour tracking.
• Include clear explanations of this method in your eligibility policies and employee communications.

Employers who properly implement the look-back measurement method can reduce administrative complexity while remaining in compliance with ACA regulations.

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).

This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.