Safe Harbor Method for an Ongoing Employee

As discussed in the Affordable Care Act: Basics for Business infographic, all businesses that employ 50+ employees must offer affordable health insurance options to their full-time employees or face a monthly “Employer Shared Responsibility Payment” on their federal tax return. So, how do you know if your ongoing variable hour employees are considered a full-time equivalent?

Safe harbor methods have been put in place to do just this. For ongoing employees, a standard measurement period of three to twelve consecutive months is used. During this period, if the employee works on average the required 130 hours per month, they are then to be treated as a full-time employee and offered affordable healthcare for the following stability period. This stability period must be equal in length to the standard measurement period however; it can be no less than 6 months. If the employee does not work on average 130 hours per month during the standard measurement period, then the employee may be treated as a part-time employee for the following stability period. This period may be no shorter than the established measurement period. Between the measurement and stability period, there is an option to have an administrative period. This time frame is to be no longer than 90 days, and can be used to confirm employee eligibility as well as notify and enroll the employee.

This process should be treated as a cycle in that the second measurement period should begin at the end of the first measurement period. If an administrative period is used, it must overlap with the prior stability period to ensure no gaps in coverage are created.

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