ACA's Rehire Rules Explained
Updated: May 18
Applicable large employers (ALEs) must consider and adhere to the rehire rules under the employer mandate. The rehire rules are important because they will directly impact whether an applicable large employer can apply another waiting period and limited non-assessment period for a rehired employee. The limited non-assessment period can only apply once for each employee's period of employment. Therefore, if an employee stops working and then returns, the employer needs to determine whether the employee is considered to be either a “continuing employee” or a “terminated and rehired employee.” An employee will be considered to be a terminated and rehired employee (who can be treated as a new employee upon return) if the employee has a period of 13 consecutive weeks during which the employee is not credited with an hour of service. Basically, this means that if the employee is gone longer than 13 weeks with no hours worked, the employer can apply another limited-non assessment period (i.e., period of 3 months after EE’s date of hire where an employer doesn’t have to offer coverage). However, the employee will be considered a continuing employee if they are credited with an hour of service within 13 consecutive weeks. In this instance, the employer must re-enroll them as soon as “administratively practicable” (which generally means the first of the following month). Further, there is a rule of parity where the employer chooses a period of weeks, of at least 4 consecutive weeks during which the employee is not credited with any hours of service that exceeds the number of weeks of that employee's period of employment with the ALE immediately preceding the period with no hours of service. For example, if an employer uses a 4-week rule of parity, an employee who works 5 weeks and then has no credited hours for 6 weeks may be treated as a new employee and a new waiting period is imposed. So, the rule of parity essentially allows an employer to treat an employee as terminated following absences shorter than 13 weeks. Therefore, employers should review written policies, SPDs and practices to ensure this rule isn’t overlooked, especially during times of temporary layoffs, furloughs and terminations.