Lookback Periods, Administration Periods and Stability Periods

Lookback measurement method. This is the approach in which an employer may determine the full-time status of an employee during a future period (referred to as the “stability period”), based on the hours of service of the employee in a prior period (referred to as the “measurement period”). Under this method, an employer looks back over a defined period of time (measurement or “lookback” period) to determine if the employee averaged at least 30 hours per week. This option is available only when it cannot be determined that the employee will be employed on average at least 30 hours per week (typically variable hour employees); an employer may not use the lookback method for employees hired to work full time and who are reasonably expected to work full time (30 hours or more per week).

Measurement Period. A measurement period to look back at hours worked that is at least three months but no longer than 12 months to determine if an employee averaged at least 30 hours per week. However, ACAManager only allows for a 6-month or 12-month lookback period. Considerations include the following:

  • The employer will need to define an initial measurement period for newly hired employees as well as a standard measurement period for all other employees. (In ACAManager, this is one and the same. All Employees would be measured using a 6- or 12-month lookback.)
  • The initial measurement period can begin on any date between the employee’s start date and the first day of the calendar month following the start date.

After a new variable-hour or seasonal employee has been employed by an employer for a standard measurement period, the employee is considered to be an ongoing employee and must have his or her hours measured on the same basis as other ongoing employees. For administrative ease, many employers coordinate the standard measurement period with their open enrollment and plan year. ACAManager will refer to these employees as “New Hires” until they have completed their Initial Stability Period.

Administrative Period. An administrative period of up to 90 days in addition to the initial measurement period and standard measurement period. This administrative period gives employers time to determine which of its employees have satisfied the requirement of an average of 30 hours per week to be eligible for coverage and time to provide those employees who have met that requirement with information about medical plan coverage options and enrollment materials. A new hire’s initial measurement period and the administrative period combined may not extend beyond the last day of the first calendar month beginning on or after the one-year anniversary of the employee’s start date.

Stability Period. A stability period, is a designated period of not less than six months (and not less than the corresponding measurement period) during which the employer must offer coverage to all individuals identified as full-time employees during the measurement period, regardless of hours worked during the stability period. For example, if an employer has a 6-month measurement period, the stability period must be at least six months. If an employer has a 12-month measurement period, the stability period must be at least 12 months.

Below is a diagram showing an Ongoing 12-month Lookback/Measurement Period and how a New Hire’s Initial Measurement period applies and ultimately joins the Ongoing Measurement and subsequent Stability Periods.

Extended Stability Period. When a New Hire has completed their Initial Stability Period and are waiting to join the Ongoing Stability Period, if ACAManager has determined they have the hours to still be considered a Full Time employee this would be when the employee enters an Extended Stability Period. Essentially, they are allowed to keep their Full Time status and coverage until the next Open Enrollment so that there is no gap in coverage between when their Initial Stability Period end and their Standard Stability Period starts.

Topics: ACAManager