Affordable Care ActThe Basic Facts
Waiting – Measurement – Stability – Administrative Periods
A “waiting period” is any period of time that must pass before coverage becomes effective for a new employee or dependent who otherwise meets plan eligibility requirements. The ACA requires an employer to offer an eligible employee coverage that is effective by the 91st calendar day, including weekends and holidays. If an employee takes longer than 90 days to accept the offered coverage, the employer is not in violation of the 90-day limit.
Look-Back Measurement Period
Standard Measurement Period, Stability Period and Administrative Period
An employer determines each on-going employee’s full-time status by looking back at the “standard measurement period” (a defined time period between 3 and 12 consecutive calendar months, as chosen by the employer.) The employer has the flexibility to determine the months in which the standard measurement period starts and ends, provided that the determination must be made on a uniform and consistent basis for all employees in the same category. If the employer determines that an employee averaged at least 30 hours per week during the standard measurement period, then the employer treats the employee as Full-time during a subsequent “stability period,” regardless of the employee’s number of hours of service during the stability period, so long as he or she remains employed. The stability period must be a period of at least six consecutive calendar months that is no shorter in duration than the standard measurement period used by the employer and that begins after the standard measurement period.
Because employers may need time between the standard measurement period and the associated stability period to determine which ongoing employees are benefits-eligible, and to notify and enroll employees, an employer may set its standard measurement period to end before the associated stability period begins. This “administrative period” permits time to process administrative paperwork and enroll employees in benefit plans. However, any administrative period between the standard measurement period and the stability period may neither reduce nor lengthen the measurement period or the stability period. The administrative period following the 3-12 month standard measurement period may generally last up to 90 days.
Initial Measurement Period
New employees whose hours are unpredictable, such as seasonal or variable hour, will have their status determined by looking over a period of time called a “initial measurement period,” which can be 3-12 months.
Measurement Period Safe Harbor Analysis Cycle
This process will continue for all employees from year to year in order to determine which employees must be offered healthcare insurance during the next Standard Stability Period.
New variable hour and seasonal employees are measured from the date of hire and may be measured simultaneously in both the Initial Measurement Period and the Standard Measurement Period.
Note: If the new employee was determined to be full-time during the Initial Measurement Period, but part-time in the Standard Measurement Period, the employee would cease to be eligible for healthcare insurance at the end of the following Initial Stability Period. Conversely, if the new employee was determined to be part-time during the Initial Measurement Period, but full-time during the Standard Measurement Period, the employee would become eligible for healthcare insurance from the following Standard Stability Period.