For new hires, when does the initial measurement period start, on date of hire, or 1st day the following month?


Answer

Measurement periods are used by employers to determine full-time status for new-hires and existing employees in regard offering health coverage under the ACA's employer mandate.

These periods are complex, but can be summed up as: periods of 3 -12 months used to determine full-time status AND periods used to determine the length of time coverage has to be offered for (after an employee is full-time they must be offered coverage until the end of the calendar year, which is 12 months maximum and 6 months minimum; 3 was pushed for but rejected).

For both new-hires and existing employees, the initial measurement period starts on the 1st of the calendar month after the employee start date or at the start of the payroll period. Employers should make sure to take into account initial and standard stability periods and standard measurement periods as well. They all typically start on the 1st day of the month or on the start of payroll.

Initial measurement for new hires is 3-12 months, standard for ongoing employees is a 12 month calendar year.

If the employee works more than 30 hours a week or 130 in a month, for more than 120 days in a year, they are full-time in regard to ObamaCare's Employer mandate. As another part of the mandate employers need to count all employee hours during initial and standard measuring period to determine if they are required to provide coverage or get a fine. Employers must look at both initial measuring and standard measuring periods, as one can override the other.

It makes sense to tie the Initial Measurement Period to the start of a payroll period which is allowed under the proposed regulations. Remember employees can't have longer than a 90 day wait time for health insurance to start.

Here is some more information on using payroll period start dates for look-back periods and initial measuring periods.

Ongoing employee

New employee

There are two sources that explain this very well (outside digging through the laws and federal registers). They are:

media-services.com - simplified explanation of employee measurement periods under ObamaCare

moulderlaw.com - complex but more detailed explanation of employee measurement periods under ObamaCare.

TIP: Employers must remember that once an employee is full-time, they must generally be offered coverage for the duration of the stability period as long as they remained employed (even if they switch to say 5 hours a week a day after officially becoming full-time).

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Ashley Hesser on

I own a small business that has employed more than 50 employees for the past two calendar years. However, we have had a less profitable year leading us to restructure and cut down our labor cost. As of this week, we have less than 50 full time employees. Given that we are inside of the 3 month measurement period, I assume that we are no longer subject to the Affordable Health Employer Mandate. Of course, we want to do the right thing and haven’t found any professional that is confident in advising on this matter to reinforce this assessment. Please point me in the right direction for assurance!

ObamaCareFacts.com on

You are right to think that your having to offer coverage is based on measurement periods and that since you won’t average 50 or more FTE in this measurement period you shouldn’t have to offer coverage. It also makes sense as to why no one wants to be that person who tells you to go ahead and drop coverage on a specific date. We wouldn’t confidently make this suggestion either as the fine for getting wrong is pretty intense. One thing to note is that your employees who do have coverage through you will be in the best place if their new plan can start on January 1st. That will give them the full-year to pay into their cost sharing on private plans. So as a safe-harbor you could offer coverage until the end of December and just take advantage of the tax breaks until then. Just a thought.

We will look into an exact answer and see what we can come up with, if anyone has a clear and definitive answer please post it in the meantime.

Chris Robison on

Hi Ashley – I just ran across this and it may be too late but thought I would reply just in case. Measurement Periods have no correlation to whether you are an employer that is mandated to offer insurance. You should use an ALE calculation which is based on your prior years number of employees, not your current.

From the IRS:

Two provisions of the Affordable Care Act apply only to applicable large employers (ALEs):
The employer shared responsibility provisions; and
The employer information reporting provisions for offers of minimum essential coverage
Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year. If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year. Employers who are not ALEs may be eligible for the Small Business Health Care Tax Credit.
If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.”

Hope this helps…

th on

This link above is broken
Here is some more information on using payroll period start dates for look-back periods and initial measuring periods.

Morgan on

If the employee works more than 30 hours a week or 130 in a month, for more than 120 days in a year, they are full-time. Then how can the initial measurement period be longer than 120 days? Also, what are employees supposed to do for health insurance / healthcare during this (up to 15 month) period?

Pamela Grams on

I live in the state of Michigan. My employer is stating that because I have already worked more than 1000 hours in the calendar, they will have to lay me off based on Obama Care laws. I have read the 30 hours a week law but is there a law for 1000 hours in a calendar year? Thank-you for any help given

Michele S on

I work an average of 19 hours per week. I have asked my employer (with greater than 50 FTE employees) to consider increasing my hours, but they won’t because they say they would have to offer health care benefits. I thought I could work up to 30 hours, not more. Please direct me to where 20 – 29 hour/week employees have to be offered partial coverage.

Marie Kaiser on

I am a P/T employee with They have used a period from 11/8/2015 to 11/7/16 to determine my eligibility for insurance for 2017. I was eligible for 2016. They concur that I am not eligible for 2017 since my hours were less than 30 hrs per week. They are including the time period i was off due to an approved workers compensation injury. a period of app. 10 weeks 7/21/16 to 10/3/16. They are self insured and did pay me for that period of time based on a % amount on previous years wages. I have a rough estimate of my hours for period they used.of 1319 hours. I have tried to find a provision in the ACA to address time lost due to a W/C injury but was not successful. I have been told by the Commission I am not eligible due to federal regulations under the ACA but could not supply a manual section to refer to. I would appreciate any insight into this. I have left messages with the Dept of Labor with no response to date. thank you for any help you can provide.
Marie Kaiser

Karly on

My employer is dropping my insurance after only 1 month of being insured due to less than 30 hour per week average. I started October 19th and the average was taken from this date through January 17th. I work at a school and it was not open due to winter break (10 days) and then weather closures (5 days). Since I was unable to work due to company policies and closures, it is legal for them to drop my insurance? At this time, I continue to be a full-time employee and if averages are taken for the rest of January on through the end of the school-year, I will certainly have an average of 30 or more hours.

Karly Eaton on

I should also mention that my insurance did not commence until 12/15/16

ObamaCareFacts.com on

Well, they should be using measurement periods that last a long enough time to account for something like winter break.

Seems super fishy to me… but certainly some people do slip through the cracks and there is always strange loopholes.

So, seems fishy, but I don’t have an exact answer.

Jim Fawcett on

I work at a livestock market in Vienna Mo, called south Central regional stockyards for several years about 6 years ago they asked me to sign a paper stating I don’t want their health insurance but I was an independent contractor receiving an 1099 at the end of the year. A year or so went by and they put me on their pay roll, still have no health coverage. What can I do?

ObamaCareFacts.com on

The simplest thing to do is probably to check with them. Under the current law they have to provide coverage if you are full-time, but Congress is busy changing that law right now, so that sort of changes the advice I might give. My advice is always to check with the employer first.

Mary L. on

Clear info and thanks for the referrals to other sources.

By the way, you have an error here, I think:
“Remember employee’s can’t have….”
I don’t think “employees” should be possessive.

ObamaCareFacts.com on

Good catch. Thank you!