Step 6: Close, Notify and Enroll
Total the hours, classify each employee, notify and enroll them inside the administrative period, and keep prior-period coverage running meanwhile.
The three things to know.
Total and Classify
Compute each employee’s average, compare it with 30 hours a week, and record the result.
Notify
Tell employees found full-time that coverage is available, and give any notices your plan requires.
Enroll and Overlap
Process enrollment before the stability period begins, and keep coverage going for people already covered.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
A Two-Month Administrative Period
A measurement period ends October 14. HR totals hours by October 31, classifies employees by November 5 and sends notices by November 12. Enrollment runs through December 15.
What the Rule Produces
Everyone is classified and enrolled before January 1, with about 78 days used of the 90 allowed. Employees covered under the prior period stay covered throughout.
Four steps to apply it.
1. Close the window
Lock the data.
2. Classify
Compute averages.
3. Notify
Send results and offers.
4. Enroll
Process elections.
Where it goes wrong. Waiting to start notices until every edge case is resolved.
The questions that come up next.
What if an employee is found full-time and declines?
Keep the waiver. A documented offer supports your position.
What if hours data is late?
The 90-day limit still applies, so escalate delays early.
Who gets the notice?
Employees found full-time, and your plan’s other required notices to participants.
What if someone is missed?
Make the offer as soon as the error is found and document it.
Do we need acknowledgements?
Not required, but they help prove delivery.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Step 7: Test New Hires and File
Run the second test for variable-hour hires, then carry the status months forward into Forms 1094-C and 1095-C.
Close and Total the Hours
Pull hours for every employee in the window, apply your equivalency method consistently, and apply the special unpaid leave averaging rules where they apply.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
Talk it through with someone who runs this every year.
We help you choose the design, document it and reconcile the hours before the numbers reach your reporting.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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