You’ve mastered the complex guidelines on how to identify which employees must be treated as full-time and offered health insurance coverage to avoid the Affordable Care Act (ACA) employer shared responsibility penalties. Now there is an ERISA requirement to communicate the guidelines with participants in your summary plan description (SPD).

9-17_spd-meet-aca-update-eligibility-provisions

The SPD is an easy-to-read statement describing the provisions and features of a qualified benefit plan, including eligibility. The two measurement methods, monthly and look-back, used for determining full-time employee status are an integral part of eligibility determination in the post-ACA world. If your plan modified eligibility rules to satisfy the employer mandate, then you should update the existing plan document, SPD and any other employee notices about eligibility under your plan.

The SPD should include enough detail so that an employee can determine if he or she is eligible for health coverage, specifically:

  • The measurement method used (look-back or monthly)
  • Which employee groups, if any, the method applies to
  • If using the look-back method, the length of measurement, stability and administrative periods
  • Optional: details on eligibility determinations for rehires, unpaid leave and change in employment status (e.g., part-time to full-time and full-time to part-time).

An updated SPD or a summary of material modifications (a plain language document that describes changes to an SPD) must be distributed no later than 210 days after the close of the plan year in which a material change (e.g., in eligibility) was made.

The IRS rules on employer shared responsibility and information reporting don’t require documenting the measurement method, but proper documentation could demonstrate a good-faith attempt to follow such rules and help prepare for an audit. Also, as Fisher & Phillips cautions, legal trouble may arise by leaving existing plan documents and employee manuals to define health insurance eligibility with something vague like “full-time employees are those employees who regularly work 30 or more hours per week.”

If you’re interested in communicating to employees above and beyond the SPD required content, check out Mintz Levin’s sample supplemental notice. See ACA Central for more information on the two measurement methods and employer shared responsibility.

Keep up with ACA’s latest transformations on ACA University, a free member service offering the latest news and insights you need to know about. 


Jenny Lucey, CEBS
Information/Research Specialist at the International Foundation

 

Jenny Gartman, CEBS

Information/Research Specialist at the International Foundation

Favorite Foundation member service: Personalized Research Service

Benefits topics that interest her most: mental health, work/life benefits, retirement readiness of different generations

Personal Insight: Jenny gets things done. She started working on her CEBS just over two years ago. Welcoming her daughter into the world during this time frame did not slow her down—she recently completed her last exam and earned her designation. When she’s not working or studying she enjoys family playtime, knitting and exercising.

 

Recommended Posts

Mental Health Parity: What Plan Sponsors Need to Know During Period of Nonenforcement of 2024 Final Rule

Kathy Bergstrom, CEBS
 

Following the announcement last month that the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury will put a hold on enforcing the 2024 final rule on the Mental Health Parity and Addiction Equity Act (MHPAEA), health plan sponsors […]

The New Look of Virtual Care: What’s Right for Employers and Plan Sponsors?

Guest Contributor
 

Benefits Magazine Extras articles provide you with bonus content on a mix of benefits topics as well as deep dives and analyses on the latest benefit trends and compliance issues. Visit ifebp.org/benefitsmagazine to see the latest Benefits Magazine Extras as well as the bimonthly print […]

Ontario’s New Long-Term Illness Leave Takes Effect Soon: What Employers Need to Know

Amanda Wilke, CEBS
 

On December 19, 2024, Ontario’s Working for Workers Six Act, 2024 (Bill 229) received Royal Assent. Amongst the changes in the bill amending the Employment Standards Act, 2000 (ESA), was the introduction of unpaid long-term illness leave, effective June 19, 2025. While the law […]