A Look Into Lookback Periods

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As you may have heard, the White House made a surprising announcement this week that the Employer Responsibility provision of the ACA will be effectively delayed by one year. The IRS has already issued safe harbor guidelines to determining how businesses will comply with the new health reform law, but this recently announced delay will give employers even more time to strategize and position themselves for success when the time comes for compliance and accountability.

The delay of Employer Responsibility (sometimes referred to as ‘Pay or Play’ or the Employer Mandate) certainly provides us all with some breathing room. But it’s important that we utilize this time to actively prepare for 2015 rather than taking a reactive, knee-jerk approach to reform. 2015 will come eventually, so it is important to remember that this announcement is a reprieve, not a reversal. So let’s talk about preparation, Lookback Periods, and how ISIhr can help.

What is a Lookback Period and how does it work?

A Lookback Period or measurement period is a safe harbor used to determine whether a new or existing variable hour employee works a full-time schedule and should therefore be treated as a full-time employee as defined by ACA (averaging more than 30 hours per week). In other words, it’s a time period between 3 and 12 months that allows you to use data from the past to create projections for the future. An administrative and stability period will follow in which the determination made from the initial Lookback Period will be implemented. The stability period must be no shorter than the Lookback, and if an employee is found to be eligible for health coverage in the Lookback Period, that employee must be offered coverage the entire duration of the stability period. Since turnover and other variables (busy seasons, growth, temporary workers, etc.) may change your labor force from month to month, the Lookback period allows you to predict your liability based on past averages, and properly offer coverage to employees you find to be eligible for health insurance.

ISIhr is here to provide as much or as little assistance with Lookbacks as requested. Since we already have all the tools in place to capture the data needed to make the proper eligibility determinations for your employees, ISIhr can help you to make sense of that data and display it in useful ways. We think knowing the specific make-up of your workforce is hugely valuable, so we suggest performing Lookback tests to any employer who has a varied workforce or anyone who is unsure what their responsibility is under ACA.

Microsoft Excel - Copy of DISI ACA REPORT.1

(Sample of ISIhr Lookback report – click to enlarge)

Here are just a few bullet points to remember about Lookbacks:

  • Lookbacks are important if you employ variable hour or seasonal workers.
  • Lookback Periods offer a safe harbor method for determining how to comply with ACA. Conducting a Lookback is not required of the law, but complying with the IRS’s Lookback method will help you comply with ACA.
  • Lookback Period lengths and date ranges are determined by the employers. However, a Lookback Period used for one type of employee must be used for all employees in similar classes or doing similar work.

Since there are so many scenarios in which Lookback and stability periods may be applied, you can read the18 page IRS guidelines to get more specifics, or you can call ISIhr.

Stratus.hr

Author Stratus.hr

Kristen’s background is in film making, but for Stratus.hr, she has her hands in everything from events to mobile app design. When she’s not editing the website or your handbook, she can be found bagging peaks and taking pictures to prove it.

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