Look Back Measurement Method Overview
May 9, 2023
Employers may average hours of service over a period of 3–12 months (the employer’s choice) to determine full-time status. If the employee averages full-time hours of service during the measurement period, the employee is then considered full-time for a corresponding stability period (generally matching the length of the measurement period). In other words, the employee will remain benefit eligible for the duration of the corresponding stability period, regardless of hours worked during that time (subject to certain exceptions).
It is common for employers to use a 12-month measurement and stability period because it can be aligned with the plan year and requires measurement and enrollment only once per year; however, some employers prefer a 6-month cycle to provide additional flexibility.
We don’t recommend that employers use anything less than 6 months due to a special rule that requires a stability period of at least 6 months for those who earn full-time status.
The look-back measurement method requires a bit more administration and less flexibility than the monthly measurement method, but for employers that have many employees crossing back and forth between part-time and full-time status from month to month (i.e. variable hour employees) or a significant number of seasonal employees, this is usually the more appropriate measurement method choice.
To request our detailed guide to determining full-time status for new and ongoing employees for employers choosing to use the look-back measurement method, please contact your dedicated Lyons Companies Employee Benefits team or click here.