Stability Period
The stability period is the time during which an employee’s status from the measurement period is held. Hours, promotions and demotions during it do not change that status for penalty purposes.
The three things to know.
For Employees Found Full-Time
At least six consecutive calendar months, and never shorter than the measurement period. The offer you make must cover the stability period.
For Employees Found Not Full-Time
The stability period cannot be longer than the measurement period, so part-time results are not held longer than full-time results.
What It Protects
Predictability. The employer knows who must be offered coverage for the period, and a mid-period change in hours does not change that.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
A Drop in Hours
An employee found full-time for a stability period running January 1 to December 31 cuts back to 20 hours a week in April.
What the Rule Produces
For the employer mandate she remains full-time through December 31, so the offer of coverage must continue. At the end of the period, the next measurement result decides her status.
Four steps to apply it.
1. Set the length
Use at least six months for full-time results, and never shorter than the measurement period.
2. Align to the plan year
Make the period match your benefit calendar.
3. Hold status
Do not change status mid-period.
4. Re-measure
Apply the next result when the period ends.
Where it goes wrong. Ending coverage mid-period when hours fall, which can expose the employer to a payment.
The questions that come up next.
Can we end coverage if hours drop in the stability period?
Not for the employer-mandate test. Status holds, so cutting an offer mid-period can expose you to a payment. Plan terms and law other than the mandate may still apply, so ask counsel.
Does the stability period have to match the plan year?
No, but aligning them keeps eligibility and the benefit calendar in step and avoids partial-year offers.
What happens at the end of a stability period?
A new measurement cycle has already produced a new status. The administrative period lets you apply it at the start of the next stability period.
Can we end an offer if the employee quits?
Ending employment ends the offer. The rehire rules govern how a return is treated.
Does the stability period include dependents?
The offer to a full-time employee must also reach dependent children, so yes.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Expected Full-Time
If you reasonably expect a new hire to work 30 hours a week or more, you cannot use an initial measurement period.
Variable Hour
A new hire is a variable-hour employee when you cannot tell at the start date whether they will average 30 hours.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
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