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Standard Measurement Period

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Configuration > ACA Setup > Standard Measurement Period

Background

If an employer is ‘reasonably’ unable to determine that an employee will work, on average, 30 hours per
week they can establish a testing period for eligibility determination. Referred to as the lookback
measurement method, employers are permitted to determine an employee’s full-time status based on
a measurement period established by the employer. The measurement period can be up to 12
consecutive months but no less than 3 months. During the measurement period, an employer is not
subject to an excise tax payment for not offering the employee with affordable health coverage.
Employees determined to be full-time during a standard measurement period must be offered
coverage during a corresponding “stability period” of the same length, but not less than six months,
even if their hours drop below the 30 hour per week average during this period and they remain
employed.

In order for an employee to be tested in a standard measurement period they must have worked the
complete period without interruption. If your company has high turnover or lower waged workers it is
advisable to use a 12 month measurement period.

The IRS allows for a company to use different standard measurement periods and multiple plans for
certain categories of employees. In an effort to provide flexibility to employers, an employer can have
different measurement and stability periods for four categories of employees:

  1. Employees located in different states
  2. Salaried and hourly employees
  3. Employees of different entities
  4. Collectively bargained employees and non-collectively bargained employees

Although companies typically use one Standard Measurement Period; you can set up multiple standard
measurement periods as defined above using the standard measurement period setup page. The
system allows for either one default standard measurement period or multiple periods defined by the
criteria mentioned above. The Standard Measure Periods (and the associated Administrative & Stability
Periods) are organized under a “Schedule Record” as seen below:

The schedule allows multiple types of standard measurement period that have varied formats. For
example 12-3-12 or 6-3-6 type measurement-admin-stability formats.

Schedule ID

You can select an existing schedule ID or create a new one by typing a name into the “New Schedule”
field. This is a unique name for this schedule record. You can have multiple standard measurement
periods within one schedule as seen below:

You will need to add a new record for each calendar year.

Overview of Standard Measurement Period Terminology

Start of Measurement Period
You can start your measurement period as of the hire date or the first day of the next month. In most
cases, you will select Using First Day of Next Month. The reason for this is that you are not credited with
having offered coverage to an individual unless the coverage period included every day of the month.
Most insurance coverage starts on the first day of the month.

Standard Measurement Period
Input the start date for your measurement period. Input the number of months in your period. When
you tab from field to field the end date will automatically calculate.

Administrative Period
If you have an administrative period, input the start date of the administrative period and the number
of months. ACA Compliance Solution will not allow you to enter more than 3 months.

Stability Period
Employees determined to be full-time during a measurement period must be offered coverage during a
corresponding “stability period” of generally the same length even if their hours drop below full-time,
provided they remain employed. The stability period can be no shorter than 6 months. The stability
period can be no longer than the preceding measurement period.
Input the start date of the stability period and the number of months. ACA Compliance Solution will
check for compliance.

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