Amwins Connect - Question of the Month

Amwins Connect Question of the Month

October 2023

Can I Use the Look-Back Measurement Method for Just My Seasonal Employees?

Question: I am an applicable large employer. Am I able to use the look-back measurement method for just my seasonal employees, and the monthly measurement method for everyone else?

Answer: No. If an applicable large employer, or ALE (50 or more full-time equivalents) wishes to use the look-back measurement method, it cannot be used only for part-time, variable hour, or seasonal employees. It must be used for all employees, or at least all hourly employees. An ALE is permitted to use different measurement methods and periods in general, but only for certain categories of employees.

See the below language from §4980H.

(v) Permissible employee categories. Different applicable large employer members of the same applicable large employer may use measurement periods and stability periods that differ either in length or in their starting or ending dates. In addition, subject to the rules governing the relationship between the length of the measurement period and the stability period, applicable large employer members may use measurement periods and stability periods that differ either in length or in their starting and ending dates for—

1. Collectively bargained employees and non-collectively bargained employees,
2. Each group of collectively bargained employees covered by a separate collective bargaining agreement,
3. Salaried employees and hourly employees, and
4. Employees whose primary places of employment are in different States.

For full-time employees, having to use the look-back measurement method for them in addition to seasonal/part-time/variable hour employees won’t matter as long as they continue to average full-time hours each measurement period; however, if a full-time employee moves to part-time or variable hour, it may be necessary to continue offering coverage through the end of the current stability period, and their average hours during the most recent measurement period matter for purposes of subsequent offers of coverage.

For employers with a significant number of variable hour or seasonal employees, it may be worth using the look-back measurement method for all employees, even though it is a bit more complicated than the monthly measurement method, because it often allows the employer to treat fewer employees as full-time and makes tracking eligibility for variable hour employees easier (e.g., annually rather than monthly). While certainly possible to handle administration of the lookback measurement method internally, many employers use a system offered by their payroll vendor or benefit administration platform to help track eligibility. For longer-term employees, the process is fairly straightforward because they are all measured over the same time frame each year and then offered coverage (or not) for the plan year. But for new hires, the look-back measurement method is a little trickier because each new employee is on their own cycle until they have been employed long enough to transition into the standard cycle. That being said, if the employer thinks of it as a 12-month waiting period, that sometimes makes it easier.

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