Benefits & Compensation News

Health reform: IRS issues new guidance on calculating full-time status

If your company has some questions about determining if certain employees are “full-time” for the purposes of the health reform law, you’re not alone. Luckily, the IRS just released some new guidance that helps.

Under the health reform law, any employers with 50 or more full-time employees must provide all full-time employees with health insurance – or pay a “shared-responsibility” penalty.

The law considers individuals who work at least 30 hours each week to be full-time equivalent (FTE) employees. But exactly how employers should determine their employees’ hours worked has been a point of confusion.

Determining ‘full-time’ status

To help, the IRS offered details on a “safe harbor,” a method employers can use to measure the full-time status of employees in its most recent guidance, Notice 2012-58.

So, for starters, employers can review employees’ previous hours worked using a “standard measurement period,” of at least three consecutive months but no more than 12 consecutive months to determine if the average hours per week meets the reform law’s 30-hour threshold.

Understanding the ‘stability’ period

Following the measurement period, there’s a “stability period,” where the average hours of employees will be projected moving forward.

The stability period must be:

  • as long as the measurement period
  • at least six months, and
  • measured after the standard measurement period.

And, according to the guidance, any employee who averages at least 30 hours during the measurement period will be considered a full-time employee regardless of the hours he works during the stability period.

 

 

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