The "Settings" menu for the Affordable Care Act allows you to create the measurement period to determine eligibility. The Measurement Periods have two purposes: it is designed to both protect the employee and the employer.

The methodology behind the Measurement Period is to use a pre-negotiated period of time (employer's choice) to gauge an employee's hours of service, allowing the employer to determine if an employee is considered a "Full Time Equivalent" under ACA. Once the employee's Measurement Period expires, the employer will have another predetermined period of time to calculate the employee's hours and offer them coverage if the employee averages 30 hours per week or more; this period is called the "Administrative Period".

Once an employee's hours of service have been calculated, and they have been labeled as a Full Time Equivalent or will remain not Full Time, the employee will enter the final period. This last phase is the Stability Period, which is a period of time during either (a) the employee is guaranteed medical coverage or (b) the employer is not required to offer the employee coverage for the entire duration.

The example below shows how the Measurement Period, Administrative Period, and the Stability Period work in conjunction - year over year. A few pieces to note are: the Stability Period must be at least 6 months and cannot be less than the Measurement Period. Although employers have an option to use a maximum 90-day Administrative Period, the sum of the Administrative Period and the Measurement Period may not exceed 13 months, and a partial month - meaning if an employer elects to use a 12-month measurement period, they cannot use the full 90-day administrative period.

This example is used to illustrate both how the Measurement settings apply and how an employer can match their Stability Period with their medical plan year. First of all, we have a few assumptions: (1) the employer has a Jan 1 - Dec 31 plan year, (2) the employer has elected to use a 12-month plan; remember that the Stability Period cannot be less than the Measurement Period, so the employer will have this period set to 12 months.

Assuming the employer wants to match their Stability Period to their plan year, we will need to offset our Measurement Period start date (i.e., not starting Jan 1). In order to execute this plan, we will start our Measurement Period on 10/10/2015 (12 months), meaning it will end on 10/9/2016. The next piece will be the Administrative Period, which, in this case, we want to fall close to or during open enrollment, and end on 12/31/2016. To ensure our Administrative Period ends on 12/31, we will set that period to 52 days (10/9 - 12/31). Now that we have the Administrative Period set to end on 12/31, our Stability Period will begin on 1/1, matching our plan year.

The measurement period can be three to twelve months, with a subsequent stability period that generally cannot be shorter than six months.

An administrative period can be scheduled at the end of the measurement period to allow processing of the measurement period numbers and offer coverage to full-time employees.

Creating/Editing a Measurement Period

1. Click Create Period from the Actions dropdown menu.

   

2. Set up the measurement period as needed for your organization:

   

   • Measurement Period Setting Name
   • Employer
   • Description
   • Measurement Period Start Date
   • Standard Measurement Period Length (In Months) - Used to determine how many hours of service were averaged during the Standard Lookback Period between the Effective Date and the Standard Lookback Months before it.
   • Stability Period Length (In Months) - Immediately follows the Standard Measurement Period and will range from the Effective Date until the Effective Date plus the Stability Months.
   • Initial Measurement Period Length (In Months) - Applies to new seasonal or variable hour employees and will range from their Hire Date for the specified number of Initial Measurement Months.
   • Administrative Period (Days) - The number of days to be used for the Administrative Period.
   • Initial Administrative Period (Days) - The number of days to be used for the Initial Administrative Period.
   • Affordability Safe Harbor - The Form W-2 Wages are based on the amount of wages paid to the employee that are reported in Box 1 of that employee’s Form W-2. The Rate of Pay is based on the employee’s rate of pay at the beginning of the coverage period, with adjustments permitted, for an hourly employee, if the rate of pay is decreased (but not if the rate of pay is increased). The Federal Poverty Line treats coverage as affordable if the employee contribution for the year does not exceed 8.3900% of the federal poverty line for a single individual for the applicable calendar year. The final regulations provide additional information on these affordability safe harbors.
   • Apply Rule of Parity - Dictates that an employer may treat a rehired employee with a break of minimum four weeks as a new employee if the employee’s break in service is longer than the employee's previous period of service prior to the break in service.
   • Active - Active Settings will be processed automatically every number of Lookback Months from the Last Processed Date.
   • Use Monthly Hours of Service - Hours of Service can be calculated either by Weekly Hours of Service or Monthly Hours of Service. Check this box to evaluate employees' Full Time Equivalency by Monthly Hours of Service instead of the default Weekly Hours of Service.
   • Eligibility Rule - Used to group employees.
3. Click Save when finished.

Deleting a Measurement Period

1. Select the measurement period(s) to delete with the checkboxes to the right.

   

2. Click Delete Selected Records from the Actions dropdown menu.

   

3. Confirm the deletion.