IRS webinar addresses full-time employee status under ACA

An IRS webinar, “Determining Full-Time Employee Status under the Affordable Care Act,” held on September 22, provided information on determining full-time employee status for the Employer Shared Responsibility provisions of the Code. Topics discussed included how to determine full-time status for seasonal and part-time employees and using the look-back method and monthly measurement method.

Mary Rogers, an IRS agent and government entity specialist, explained that Code Sec. 4980H provides that an applicable large employer (ALE) is liable for an assessable payment if any full-time employee receives the Code Sec. 36B premium tax credit, and the employer either did not offer overage to at least 95 percent of full-time employees, or offered coverage that was not affordable or did not provide minimum value.

Full-time employee determination. Rogers explained that, for purposes of Code Sec. 4980H, a full-time employee is one who works at least 30 hours a week. In determining full-time employees, Rogers said, employers must account for all employees, to include seasonal workers. Lori Stieber, also an IRS agent and government entity specialist, added that, to determine full-time equivalent employees, employers are to take the hours worked by non-full-time employees and divide by 120.

Rogers explained that full-time employee status is important to determine applicable large employer status, to determine to whom it needs to offer coverage, and which employees could trigger a penalty for an employer under the Patient Protection and Affordable Care Act (ACA).

Methods to determine full-time employees. Rogers stated that there are two methods used to determine the number of full-time employees that an employer has: the monthly measurement method and the look-back measurement method. For the monthly measurement method, she explained, an employer is to determine whether an employee is a full-time employee on a month-by-month basis by looking at whether the employee has at least 130 hours of service for the month.

Alternatively, the look-back measurement method allows an employer to determine whether an employee is a full-time employee during the “stability period” based on the hours of service of the employee in a preceding period of up to 12 months, known as the “measurement period,” according to Rogers. She cautioned that the look-back measurement method is only used in determining penalty liability under the ACA and not for determining an employer’s ALE status. The look-back method is frequently used in determining full-time status for ongoing employees, newly hired employees who are expected to work full-time, newly hired seasonal or variable employees, and employees transitioning from newly hired to ongoing status.

Service hours. Rogers and Stieber explained that an hour of service is each hour for which payment is made or due to an employee. For non-hourly employees, Rogers stated, hours of service can be accounted for in a similar manner; by using a days-worked equivalency where the employee is credited with eight hours of service for each day for which the employee would be credited with at least one hour of service; or by using a weeks-worked equivalency where the employee is credited for 40 hours of service for each week for which the employee would be credited with at least one hour of service.

The IRS officials noted that the Service offers a number of ACA-related resources to help employers comply with Code Sec. 4980H. These resources can be found on

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