How to determine who qualifies for benefits
Employees normally fall into one of three categories when determining qualification for benefits:
- Those that are reasonably expected to work full-time - they automatically qualify
- Seasonal employees - do not qualify for benefits, but are used when calculating "large" employer status (so you do have to track their hours)
- Individuals who's hours vary - might be liable, depending on if they meet the criteria for a full-time employee
So, this begs the question "How does the PPACA define a full-time employee?". Well a full-time employee is someone who worked an average of 30 or more hours per week, or 130 hours per month in the measurement period. The "measurement" period is a 3-12 month (company selected) period of time that is used to determine is an employee, who's hours vary, qualifies for benefits or not. So, if you average out the number of hours worked for the employee during this time period and it is over 30 hours, the employee would qualify for benefits.
If an employee who's hours vary qualifies for benefits, they are eligible in the following "stability" period. This period of time cannot be shorter than 6 months long, and is typically the same amount of time as the "measurement" period.
Also, if an employer so wishes, they can utilize an "administrative" period of a maximum of 90 days to execute any administrative tasks pertaining to getting the newly qualified employee enrolled in the health care plan.
This cycle of measurement, administrative, and stability periods is a continuous cycle throughout the entirety of the employees time of employment with your company. Most companies will choose to do a 12 month look back period with a 12 month stability period so they only have to go through this process as few times as possible.
So, for sake of clarity, lets go through an example. Let's say John is an employer who begins his look back period for his employees, who's hours vary, at January 1, 2013 (assuming John has had no new employees who's hours vary since the beginning of 2013). If he chooses to do a 12 month "measurement" period it would end on December 31, 2013. He would then have 90 days (until March 31st, 2014) to get the employee enrolled and complete all administrative tasks pertaining to this. Then the 12 month "stability" period would begin as soon as the "administrative" period ended. As soon as the first "measurement" period ended, a new one would begin to determine eligibility for the next year. This cycle would continue for each employee who's hours vary until the termination of that employee.
A company may have multiple "measurement" periods for different types of employees, such as:
- Union vs. non-union
- One for each union
- Hourly vs. salary employees
- One for each state the employees are located in
It is very important that all employees of the same type (hourly, state, or however you have it broken down) must be treated the same. If an employer has multiple businesses, each can have a unique measurement period.
Right about now you are probably thinking to yourself "how in the world do I figure out what 'measurement' period do I use?" This is a great question, and, as stated above, most employers will probably choose a 12 month period but this is something that should be discussed with your benefits administrator to find the most suitable measurement and stability periods.
If you need help with health benefits administration, we may be able to help. OnPay is a licensed insurance broker in all 50 states.