If your business employs at least 50 full-time equivalent employees, you know that the Affordable Care Act will penalize you in 2015 if your business does not provide your full-time employees with affordable health insurance. But did you know that the determination of who is a full-time employee may need to start as early as November 1, 2013?
When deciding if an employee works full-time (30 hours per week), the ACA allows employers to set measurement periods during which you keep careful track of an employee’s hours of service (hours actually worked and hours of pay for vacation, sick leave, etc.) and then decide if that particular employee has actually averaged 30 hours per week over that measurement period.
For current employees whose hours fluctuate over and under the 30 per week criterion or whose hours fluctuate over the course of the measurement period (such as construction employees who may work 60 hours per week during the height of a building project and 10 or 20 hours per week when the project slows down), this standard measurement period can be between 3 and 12 months.
The standard measurement period is followed by an administrative period of no more than 3 months, during which the employer can make the calculation and offer the employee insurance if he/she is averaging 30 hours or more per week.
That administrative period is followed by a stability period of at least as long as the standard measurement period, during which the employee must be allowed to stay on health insurance even if he/she drops below the 30-hour per week standard.
Many employers are choosing a standard measurement period that lasts the maximum of 12 months. Then they will need at least a couple of months for their administrative period to make their calculation and get their employees enrolled. For employers who are on an insurance plan that renews with the calendar year, or for those who want to make sure they are completely in compliance with the Affordable Care Act before the employer penalties start in 2015, they would be well-advised to start their standard measurement period on November 1, 2013 and conclude it on October 31, 2014. The administrative period would then take all of November and December 2014. The result would be that all employees who are full-time would be measured and offered health insurance in time for a January 1, 2015 enrollment. The stability period would then run from November 1, 2014 to October 31, 2015, concurrently with the next standard measurement period.
The employer who faces this issue will need a written policy setting out the dates that the employer has chosen for its measurement periods with an explanation of how it works for the employees.