Part-time versus full-time and mid-year departures both depend on rules you write down before the year starts.
An ICHRA class often depends on hours worked, and employees leave or change status all year. A written measurement rule and a clear mid-year process keep treatment consistent.
What to write down.
Pick a Definition
Write down how many hours separate full-time from part-time and apply it the same way to everyone.
Measure the Same Way
Choose a measurement method, such as a look-back period, and use it for every employee in the class.
Gaps Between Assignments
Workers with gaps between assignments or seasons need a rule for how time away counts.
Employees Who Leave
Decide when the allowance stops after a departure and how final reimbursements are handled.
Status Changes
When someone moves from part-time to full-time, the class and allowance may change. Decide the effective date.
Tell Employees
Employees should know the rules in writing. Put them in the plan document and the notice.
Measuring Hours: The Numbers Behind Full-Time Status
Three decisions drive nearly every hours question: how full-time is defined, which measurement method the employer uses, and how long a status holds once it is set.
The full-time definitions
| Measure | Threshold |
|---|---|
| Average hours of service per week | At least 30 |
| Hours of service in a calendar month | 130 |
| Optional weekly rule, four-week month | 120 |
| Optional weekly rule, five-week month | 150 |
Hours of service include each hour paid or entitled to be paid for performing duties, plus paid time off for vacation, holiday, illness, layoff, jury duty, military duty or leave of absence. Bona fide volunteer hours and Federal Work-Study hours are excluded. Source: 26 CFR 54.4980H-1(a)(21) and (a)(24).
Two ways to measure
Under the monthly method, status is set by counting hours in each calendar month. Under the look-back method, the employer measures hours over a period and holds the result for a stability period. The look-back method applies to the employer shared responsibility payments and not to the large employer determination.
| Look-back element | Rule |
|---|---|
| Standard measurement period | Chosen by the employer, up to 12 months, applied consistently within each category of employee |
| Administrative period | Optional, up to 90 days, overlapping the prior stability period |
| Stability period for a full-time result | At least six consecutive months, and no shorter than the measurement period |
| Initial measurement period for new variable-hour, seasonal and part-time employees | At least three and no more than 12 consecutive months |
Source: 26 CFR 54.4980H-3(c) and (d).
An illustrative twelve-month cycle
| Period | Dates | What happens |
|---|---|---|
| Measurement | November 1, 2026 to October 31, 2027 | Hours are counted for each employee |
| Administrative | November 1 to December 31, 2027 | Status is determined and notices prepared |
| Stability | January 1 to December 31, 2028 | An employee who averaged 31 hours a week is treated as full-time all year, even if hours drop to 22 in June |
Illustrative dates and hours.
What the ICHRA class rules add
The plan sponsor chooses its classes before each plan year, and they cannot change for that plan year. If the sponsor uses full-time, part-time and seasonal classes, all three must be defined under the same rule, either the section 4980H definitions or the section 105(h) definitions, and the plan document must state the definitions before the plan year begins. An employee who is not eligible at the start of the plan year gets a notice by the date coverage may first take effect.
Source: 26 CFR 54.9802-4(c)(6) and (d). How a status change mid-year affects a given employee’s allowance should be written into the plan document and reviewed by counsel.
The questions employers ask about hours and mid-year changes.
Who decides how hours are measured?
The employer, in writing, within what the rules allow. Counsel should review the method.
Can I use a look-back period?
Many employers do, because it gives employees a stable class for a set period. Counsel should confirm the method.
What happens when someone leaves mid-year?
The plan should say when the allowance ends and how reimbursements for the final period are handled.
Can the allowance be prorated?
Many plans prorate for partial months, and the plan document should say so.
What if hours change?
The class changes when status changes under your written rule, applied the same way for everyone.
Do seasonal workers count?
Seasonal employees are a permitted class with their own rules.
Does this matter for staffing firms?
Yes. Staffing and project work involve gaps, so our staffing page covers it.
General information about individual coverage HRAs, not legal or tax advice. Plan-specific questions belong with ERISA counsel and your tax advisor, and we will bring them in.
Where these details come from.
This page summarizes public guidance reviewed in October 2026. Rules change, so confirm current requirements with counsel.
CMS: Individual Coverage HRAs →
U.S. Department of Labor: Employee Benefits Security Administration →
More ICHRA questions and the industries they affect.
Class Assignment
Sort each employee group into a permitted class.
Allowance Cost Modeling
Peak and slow season budgets.
Employee Enrollment Help
How employees compare and enroll in coverage.
ICHRA for Restaurants and Hospitality
Tipped, hourly and seasonal staff.
ICHRA for Staffing Agencies
Internal staff and placed employees.
ICHRA for Child Care and Early Education
Teachers, aides and school-year schedules.
ICHRA Pros and Cons
What employers gain and what they take on.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →