Measurement Period
The measurement period is the window of three to twelve months over which you average each employee’s hours. You choose its length and its start and end dates within the regulation’s limits.
The three things to know.
Length and Dates
Three to twelve months, with start and end dates you set. Many employers choose 12 months ending a few weeks before open enrollment.
The Threshold
An employee who averages at least 30 hours of service per week over the period is full-time. For a 12-month window that is 1,560 hours; for six months, 780; for three months, 390.
Consistency Matters
The period must be uniform and consistently applied to the employees in a category. Changing it from year to year invites questions about what the design was meant to achieve.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
Choosing Dates
A calendar-year plan sets its standard measurement period from October 15 to October 14. An employee works 130 hours a month through the window.
What the Rule Produces
Over the 12 months that is 1,560 hours, or exactly 30 hours a week, so the employee is full-time. A window ending October 14 leaves the rest of the year for the administrative period before the January stability period.
Four steps to apply it.
1. Pick a length
Choose three to twelve months.
2. Set the dates
Work back from open enrollment so there is room for the administrative period.
3. Apply it uniformly
Use the same window for every employee in the category.
4. Document it
Put the dates in the plan document.
Where it goes wrong. Choosing dates that leave less time than the administrative period needs before the stability period starts.
The questions that come up next.
Can the measurement period change each year?
It can be changed with a documented decision, but the regulation expects a consistent design, and changes should be made with an eye to transition rules.
Do all employees share the same dates?
Ongoing employees in a category share the standard measurement period. New variable-hour hires have their own initial period.
Does a longer window help?
Longer windows smooth swings in hours but lock each decision in for longer. See the sample designs for how the trade-off plays out.
Can the window start on any date?
Yes, within the three to twelve month limit, as long as it is applied consistently.
Should we use the plan year as the window?
It is simple, but it leaves no room for an administrative period, so most employers use an earlier window.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Administrative Period
The administrative period is an optional gap of up to 90 days between measurement and stability.
Stability Period
The stability period is the time during which an employee’s status from the measurement period is held.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
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