Test Anyone Still in an Initial Period
Hires from the last year may be partway through an initial measurement period and due their first standard test. Their first stability period holds regardless.
The three things to know.
List Recent Hires
Identify variable-hour hires and where each sits in its initial measurement period.
Run the Standard Test
Include them in the first full standard measurement period after their start date.
Keep the First Stability Period
An employee found full-time on the initial period stays full-time through that stability period, even if the standard test comes out lower.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
Hires From Last Spring
Three variable-hour employees hired in April are in 12-month initial measurement periods that end next April. The standard window just closed in October.
What the Rule Produces
Each is also placed in the first full standard measurement period that begins after their start date. Their first stability periods hold regardless of the standard results.
Four steps to apply it.
1. List the hires
Find everyone in an initial period.
2. Check dates
Note each window’s end.
3. Add to the standard cycle
Include them in the first full window.
4. Record results
Update the status list.
Where it goes wrong. Dropping new hires from the process because their first period has not ended.
The questions that come up next.
What if the initial period ends in January?
The administrative period limits still apply. Track the end date for each hire.
What if they quit?
The record stays, because a returning employee’s status depends on the rehire rules.
Who tracks this?
Your benefits system or vendor, with HR reviewing.
Does the second test change their first stability period?
No. The first period holds.
What if they leave?
Keep the record in case they are rehired.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Keep the Evidence
Keep the hours report, the status list and the notices.
Who counts as a full-time employee under the ACA?
The short answer: an employee who averages at least 30 hours of service per week, or 130 hours in a calendar month.
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.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential — needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics — tell us which pages get read, so we know what is worth writing more of.
- Advertising — set by third parties such as ad and social platforms to measure and target campaigns.