Full-time to part-time trigger to cut coverage?

Question:

We have a full-time employee who will be going part-time. Can we discontinue coverage immediately when they go part-time?

Answer:

No.

Not without heightening your risk of a coverage penalty.

When you can discontinue coverage depends on which measurement method you are using to test eligibility.

 

  • If you are using the more popular look-back measurement method, you would test the employee in the last measurement period applicable to them to see if they worked enough hours to be eligible for coverage as if they were a variable-hour employee during that period. Chances are they will have been credited with the hours necessary to qualify for coverage and therefore would be in a stability period, which would guarantee them continued access to health coverage. Under this method, the employee would continue to be eligible until a standard measurement period test would designate them as not being ACA full-time.

 

  • If you are using the monthly measurement method, coverage can only be discontinued after their first three consecutive months of being credited with less than 130 hours of service. Keep in mind that if the employee does happen to be credited with 130 hours of service or more in the subsequent month, they would have to be offered coverage again.

 

This Q&A was first published by ACA Insights' Helen Karakoudas on September 28, 2016 in a LinkedIn Pulse article titled "In the world of ACA compliance, every day should be Ask a Stupid Question Day."