Advantages to using the look-back measurement method
The advantage to using the look-back measurement method is that the employee would have to average at least 130 hours a month within the test period.
Example: If a Standard Measurement Period is 12 months, then an employee would have to have worked a total of 1,560 hours during that period (130 hours per month times 12 months). An employee may fall below 130 hours in a particular month but as long as they work 1,560 hours during the Standard Measurement Period, they would be a full-time employee.
A second advantage is that the employee would have to work the entire period in order to become eligible. So, if you have a measurement period of 12 months, and the employee only works 11 months, they would not be eligible as they did not complete a testing period cycle.
- Important to note here is that full-time employees do not use an Initial Measurement Period or a Standard Measurement Period
If an employee is “reasonably” expected to work at least 30 hours per week from their start date, they are deemed full-time and an employer must offer them coverage that will begin no later than the first day after their first three full months of employment. Full-time employees have waiting periods, not testing periods, and have an employment type of FULL-TIME in the Integrity Data ACA Compliance Solution.
The need for ACA hours calculation
The look-back method does not lessen the administrative record keeping in monitoring employee hours of service.
- The employer must keep accurate records of hours of service by month.
This accounting is needed to meet the IRS yearly reporting requirement through the generation of IRS Form 1095-C and its transmittal, IRS Form 1094-C.
The law requires accurate monitoring of all employees’ hours of service. The regulations define an hour of service to mean: