Full-Time / Part-Time Determination

• Written policy defining your standard and initial measurement periods, administrative period, and stability period, with specific date anchors.
• HRIS/payroll reports with hours of service (paid hours including paid leave), hire and rehire dates, and job status changes.
• Special unpaid leave tracking (FMLA, USERRA, jury duty, and educational breaks) so you can make proper adjustments to the measurement period calculation.
• Process to flag new full-time hires separately from variable-hour hires, since the offer deadline and methodology are different.
• Eligibility notice and offer of coverage templates ready to send within the administrative period.
• Rehire and break-in-service checklist with the 13-week/26-week thresholds and the rule-of-parity test documented.

• Eligibility notices and offers of coverage: Send within the administrative period so coverage can start at the beginning of the stability period. Don't let the administrative period slip; a late offer means coverage starts late, which can create Section 4980H exposure.
• Delivery method: Electronic delivery via HRIS tasks or e-sign is acceptable; retain electronic acknowledgments and timestamps. Paper works too; keep signed copies.
• Waiting period coordination: Ensure your measurement and administrative period structure doesn't result in a coverage start date that violates the 90-day-maximum waiting period limit for employees who turn out to be full-time.

• Written policyNaming the measurement, administrative, and stability periods with date anchors; snapshots of HRIS configuration.
• Hours reportsMonthly and annual hours reports used for determinations, including special leave adjustments and how they were applied.
• Offer and waiver recordsDates sent, delivery method, employee response.
• Rehire and break-in-service determinationsWith supporting dates.
• 1095-C coding support filesMapping each employee's status by month.

Can new full-time hires be put into an initial measurement period?

No. An employee who is reasonably expected to work full-time when hired must be offered coverage no later than the 1st day of the 4th full calendar month. The initial measurement period is only for employees whose full-time status is genuinely uncertain at hire: variable-hour, seasonal, and part-time hires. Putting a clearly full-time hire into a measurement period to delay their offer is a compliance violation.

Can we switch from the look-back method to the monthly method mid-year?

Changes to measurement methods and periods are permitted but restricted. Follow IRS Notice 2014-49 when modifying methods or periods, particularly in connection with mergers, acquisitions, or plan-year changes. Document the transition carefully.

How are FMLA, USERRA, and other special unpaid leaves handled?

You must exclude the leave period from the measurement period or average hours across the remaining non-leave period so the leave doesn't artificially depress the employee's hours and reduce their status. Simply counting zero hours for leave weeks is not compliant.

What if a variable-hour employee appears to be averaging full-time mid-measurement?

You are not required to offer coverage mid-measurement simply because an employee's hours are tracking high; the look-back method is designed to be assessed at the end of the measurement period, not on a rolling basis. If you choose to offer coverage early anyway, there is no specific regulatory deadline tied to that voluntary decision; offer as soon as administratively practicable. A different rule applies if the employee formally changes to a position expected to average at least 30 hours per week: the employer has a safe harbor from Section 4980H liability for the period before the first day of the fourth full calendar month following that status change, provided coverage is offered by that date. Your written policy should address how mid-measurement hour trends and formal status changes are handled separately.

What are the penalties if we miss an offer or misclassify an employee?

If an ALE fails to offer coverage to 95%+ of full-time employees and dependents and at least one full-time employee receives a Marketplace premium tax credit, the Section 4980H(a) penalty applies: $3,340 per full-time employee (minus 30) for 2026 ($3,780 for 2027), assessed monthly at 1/12. If the offer was made but wasn't affordable or didn't meet minimum value, the Section 4980H(b) penalty applies: $5,010 per affected employee for 2026 ($5,670 for 2027). The IRS proposes these assessments via Letter 226J. For information-return penalties on 1094-C/1095-C filings, see the ACA Reporting page.

Educational employees with summer breaks, how do we handle them?

The break-in-service threshold for educational organizations is 26 weeks (rather than 13). Apply the educational employment break crediting rules when determining how to count hours during academic breaks. If the break is 4+ weeks and at least as long as the prior period of employment, the rule of parity may also apply.

• eCFR: 26 CFR 54.4980H-3: Determining full-time employee status; the look-back and monthly methods in full
• eCFR: 26 CFR 54.4980H-1: Definitions, including hours of service and special leave rules
• IRS: Employer Shared Responsibility Provisions Q&A: Full-time employee identification overview and ESRP enforcement
• IRS Notice 2014-49: Changes in measurement periods and methods; mergers and acquisitions; transition rules
• IRS Instructions for Forms 1094-C and 1095-C: Coding, reporting, and examples relevant to measurement period determinations

• Educational organizations: The break-in-service threshold is 26 weeks rather than 13. Apply the educational employment break crediting rules when measuring hours during academic breaks. These employers also have specific rules for how to credit hours during unpaid summer breaks for continuing employees.
• Staffing and seasonal workforces: Define employee categories clearly in your written policy and apply the initial measurement period consistently across each category. Track client assignment gaps carefully to distinguish between a break in service and a temporary lull in scheduled hours.
• Multiemployer plans: Coordinate eligibility determinations and offer obligations with collective bargaining agreement rules and fund requirements. Document any reliance on multiemployer interim guidance.
• Mergers and acquisitions: Review IRS Notice 2014-49 for transition rules. Align measurement periods and methods across acquired or divested groups and document any interim rules applied during the transition year.

★Use the reference card below to document your period elections and keep them with your ACA records. Then use the employee tracking worksheet to run your annual measurement and record each determination. Keep completed worksheets for at least 3-4 years.