The Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act, often referred to as the Affordable Care Act (ACA), requires covered employers to either offer group health insurance to at least 95 percent of their qualifying, full-time employees or choose to pay a penalty fee. This is known as the shared responsibility feature of the act.
Employers with 50 or more full-time employees, including full-time equivalents (FTEs), are referred to as applicable large employers (ALEs) and are covered under the law. Smaller employers are exempt but may be eligible for a tax credit if they choose to offer group health insurance.
Full-time employees averaging at least 30 hours of work per week (or 130 hours in a calendar month) are eligible for coverage. Plans offering dependent coverage must also cover dependent children up to age 26. There is no requirement to offer dependent coverage to spouses.
FULL-TIME STATUS DETERMINATION
Employees hired full-time with the expectation of working 30 or more hours per week meet the criteria for coverage and may not have an enrollment waiting period longer than 90 days.
When it cannot be reasonably determined at hire if an employee will average 30 hours per week, the ACA provides two options for determining full-time status:
- Monthly Measurement Method. As the name indicates, this method determines full-time employee status (and therefore eligibility) on a month-by-month basis. This method may be impractical for employers with many variable-hour employees moving in and out of coverage on a monthly basis.
- Look-Back Measurement Method. This method sets a specific amount of time (between three and 12 months, known as the measurement period) in which the hours actually worked by the employee are averaged to determine full-time status. The administrative period is the time allotted for the employer to calculate the average hours of the measurement period. If found to qualify as full time, the employee will be granted a stability period during which he or she will become and remain eligible for coverage regardless of whether hours worked drop below 30 per week during that period.