At what point does an hourly employee become eligible for benefits?

February 6, 2017
At what point does an hourly employee become eligible for benefits?
Requirements around employee benefits are first based on the number of full-time employees a company has. If the company is an Applicable Large Employer, an hourly employee becomes eligible for benefits if the number of hours they work meets or surpasses full-time work. The Affordable Care Act and the IRS define a full-time employee as one who works at least 30 hours a week or 130 hours a month on average. Employees who will be working full-time should be offered benefits based on the company's Waiting Period. If the company is not an ALE, offering benefits to hourly employees is based on the company policy and carrier requirements.

Method for determining full-time status

When dealing with employees whose schedules fluctuate, it can be difficult to determine if their hours meet a level that is full-time. In situations such as this, the federal government has outlined a process for determining eligibility. The process involves 3 parts:

Standard measurement period

During this time (3-12 months according to employer's discretion), an employee's total hours are divided by the number of weeks worked to determine if their hours are averaging 30 or more per week.

Administrative period

During this time (no more than 90 days), the employer calculates an employee's eligibility, discusses the employee's status with them, and enrolls the employee in a benefit plan, if necessary.

Stability period

During this time (6-12 months and not shorter than the Standard Measurement Period), the employee is offered benefits if qualified. An employee's offer and enrollment status is protected even if their hours drop below 30 per week until the Stability Period has ended and eligibility is determined again.

Final tips

Beginning the Standard Measurement Period and documenting the hours worked each week during that Period can help you navigate benefit eligibility questions for your hourly employees.

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