This blogpost is a supplement to our free webinar on how to track employee hours. For more information about this topic or to answer specific questions, please contact us to request an appointment or e-mail our webinar presenter Alice Rhodes at email@example.com .
So you have made the determination as an organization that you need to track employee hours, but what how do you do that? Our blog today will cover how to track for calendar and non-calendar year plans.
Calendar Year Plans
Employers that have calendar year plans and want to use a 12-month standard measurement period (and, in turn, a 12-month stability period) should begin measuring their employees’ hours of service on January 1. However, an employer that wants to take advantage of an administrative period would have to begin measuring its employees’ hours of service at some point in the previous year (depending on the length of the administrative period).
For example, an ALE that wants to use the look-back measurement method may need to start measuring hours of service as early as October of the prior year. This date would apply if the employer wants to use a 12-month stability period beginning on January 1, and take advantage of the maximum 90-day administrative period. It can be helpful to work backward to determine the applicable dates. In more specific terms, an example is as follows:
- The stability period would run for the entire 2016 calendar year to coincide with the plan year;
- A full 90-day administrative period would run from Oct. 3, 2015, through Dec. 31, 2015; and
- A 12-month measurement period would begin on Oct. 3, 2014.
Employers may want to set up the measurement, administrative and stability periods to begin on the first day of the month for administrative ease. This can be accomplished by using a shorter administrative period. Then, employers would not have to begin measuring hours of service so early.
For example, an employer with a calendar year plan may use the following timelines:
- A 12-month measurement period from Nov. 1, 2014, through Oct. 31, 2015;
- A 61-day administrative period (the months of November and December) ending on Dec. 31, 2015; and
- A full 12-month stability period from Jan. 1 through Dec. 31, 2016.
Keep in mind that employers that have calendar year plans and want to use a 12-month standard measurement period (and, in turn, a 12-month stability period) will have to begin measuring their employees’ hours of service no later than Jan. 1, 2015. However, an employer that wants to take advantage of an administrative period would have to begin measuring its employees’ hours of service at some point in 2014 (depending on the length of the administrative period).
Non-calendar Year Plans
In general, the ACA’s pay or play penalty goes into effect on Jan. 1, 2015, for both ALEs with calendar year plans and ALEs with non-calendar year plans. However, the final regulations include transition relief that provides ALEs that have non-calendar year plans with additional time to comply, if certain conditions are met.
Thus, employers that have non-calendar year plans may have some additional time before they need to begin tracking employees’ hours of service. For example, an employer with a plan year beginning April 1 that is using a 90-day administrative period may use a 12-month measurement period from Jan. 1, 2015, through Dec. 31, 2015, followed by an administrative period ending on March 31, 2016.
AUI Has Tools to Help You
Do you have more questions about how to track employee hours? Do you wonder if your organization should be tracking? AUI can help you answer those questions and provide you with some tools to assist with the process.