The ACA's look-back measurement period

Why the Look-Back Method Matters

The look-back measurement method exists because many employees’ hours fluctuate. Counting hours month-by-month is often impractical for variable hour, seasonal, or part-time staff. The look-back approach smooths out variability: you measure hours over a prior window and if the average meets the full-time threshold you give the employee a future period of guaranteed full-time eligibility (the stability period). This creates predictable treatment for workers whose monthly hours move above and below the 30-hour threshold.

Key Definitions

Applicable Large Employer (ALE)

Employers with 50 or more full-time employees or equivalents are ALEs and must follow employer-shared responsibility rules under the ACA.

Measurement Period

A consecutive window used to tally hours (minimum 3 months, maximum 12 months) to determine whether an employee averaged 30+ hours per week (full-time).

Stability Period

The period after measurement during which employees who averaged full-time in the measurement window must be treated as full-time. The stability period generally corresponds in duration to the measurement design used.

Administrative Period

A short window between the measurement and stability periods, used for enrollment/administration, may be up to 90 days. For new hires, total initial measurement + admin cannot push the stability start beyond the last day of the 13th month after hire.

Who Uses the Look-Back Method and When

Not for known full-time hires

If, at hire, you know or reasonably expect an employee will average 30+ hours/week, you must treat them as full-time and offer coverage promptly, no look-back allowed for these hires. The ACA allows at most a 90-day waiting period, so coverage must be effective no later than the first day of the fourth full calendar month.

Ideal for variable, seasonal, and part-time hires

If hours are uncertain at hire, the look-back method is appropriate. You place the worker into an initial measurement period (3–12 months)- if they average full-time hours in that period, they gain full-time status for the initial stability period that follows.

Typical Measurement / Admin / Stability Design

A common calendar used by employers:

• Ongoing Measurement Period: 11/1–10/30 (12 months)

• Administrative Period: Nov and Dec (example: 60 days)

• Ongoing Stability Period: 1/1–12/31 (12 months)

  
  

New hire example (hire date 4/15/22) — demonstrates the 13-month constraint:

• Initial Measurement: 5/1/22–4/30/23

• Initial Administrative Period: 5/1/23–5/31/23 (1 month admin to fit rule)

• Initial Stability Period: 6/1/23–5/30/24

  
  

This schedule ensures the stability period begins by the last day of the 13th month following hire, as required.

Practical Rules & Common Traps (Actionable bullets)

• Don’t use look-back for a hire you reasonably expect to be full-time. If expected full-time at hire, coverage must begin no later than the first day of the fourth full calendar month (90-day waiting limit).

• Watch the initial measurement + admin limit. For new hires, the combined initial measurement and administrative period cannot delay the initial stability start past the last day of the 13th month.

• Stability period protection holds. If an employee averaged full-time during the measurement period, they remain eligible for the entire stability period even if hours drop mid-stability. If coverage ends later, COBRA may be required.

• Pick measurement length strategically. Shorter measurement periods accelerate eligibility but require more frequent administration; longer periods smooth variability but delay eligibility.

• Document everything. Maintain clear written policies showing measurement, admin, and stability windows-these records support consistent application and audit defence.

  
  

What Happens When an Employee Moves From Full-Time to Part-Time?

If an employee earned full-time status in the measurement period and is in a stability period, the employer must maintain coverage through the end of that stability period, even if hours fall. If the employer later ends coverage because the role truly converted to a bona fide part-time job, the loss of coverage could be a COBRA qualifying event and must be handled accordingly.

Best Practices: Checklist for HR, Benefits, and Payroll

1. Choose a measurement window (3–12 months) that balances speed to eligibility vs administrative burden.

2. Set the admin period (0–90 days) realistically to process eligibility and enrolments.

3. For new hires, test scenarios to ensure initial measurement + admin won’t exceed 13 months.

4. Automate hour tracking through payroll or HCM to reduce calculation errors.

5. Document timelines in plan documents and employee guides to provide transparency and consistency.

6. Coordinate with COBRA/benefits vendor so that stability-end events trigger correct notices.

7. Communicate clearly to managers and account teams how different employee classes are handled.

FAQs 

Q: What length can a measurement period be under the look-back method?

A: Employers may use a measurement period from 3 to 12 months, depending on their administrative preference and workforce variability.

Q: Can I delay offering coverage beyond 90 days for new hires?

A: No, the ACA limits waiting periods to 90 calendar days; if you reasonably expect a hire to be full-time, coverage must start no later than the first day of the fourth full calendar month.

Q: How does the 13-month rule affect new hire measurement periods?

A: For newly hired employees, the initial measurement period plus administrative period cannot delay the start of the initial stability period beyond the last day of the 13th month following hire.

Q: If someone averaged full-time during the measurement period, can I remove coverage mid-stability if they cut hours?

A: No, once in a stability period, the employee must be treated as full-time for that full stability period. Ending coverage later may trigger COBRA obligations.