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Part 14 · Chapter 2

Full-Time Determination, Measurement Periods, and Affordability

Law stated as of October 3, 2026 · ACA Employer Mandate and Health Reform

Scope and status

This is the operational companion to ACA Employer Mandate, Reporting, and Market Reforms, which states the §4980H framework in outline. This chapter works the mechanics that decide almost every real engagement: who is a full-time employee, over what period, and whether the offer made to them was affordable. The underlying regulations have been stable since 2014; the indexed figures have not. Re-verify every dollar amount and percentage for the year at issue. The §4980H penalty framework, §6055/§6056 reporting, ICHRA design, and the market reforms are in the primary chapter; the Line 14/15/16 coding logic is in ACA Information Reporting: §6055 and §6056. For controlled-group aggregation, see Part 1 (Controlled Groups and Affiliated Service Groups) (do that first — it decides ALE status), §125 election mechanics to Part 13 (COBRA, HIPAA, and Welfare Benefits), and hours-of-service crediting for retirement plan eligibility to Part 5 (Qualified Plan Testing, Eligibility, and Vesting) (a different rule set — do not cross them).

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Hours of Service and Who Counts

A1.The hours-of-service definition

Part 14, ch. 2, § A1

A full-time employee for §4980H is one credited with an average of at least 30 hours of service per week, or 130 hours of service per calendar month, which the regulations treat as equivalent. An hour of service is each hour for which an employee is paid or entitled to payment for performance of duties, plus each hour for which the employee is paid or entitled to payment for a period during which no duties are performed (vacation, holiday, illness, incapacity including disability, layoff, jury duty, military duty, or leave of absence). Statute: Code §4980H(c)(4); Final reg: 26 C.F.R. §54.4980H-1(a)(24), §54.4980H-1(a)(21).

A2.Counting methods for non-hourly employees

Part 14, ch. 2, § A2

For hourly employees, actual hours must be used. For non-hourly employees the employer may use actual hours, a days-worked equivalency of 8 hours per day, or a weeks-worked equivalency of 40 hours per week — but may not use an equivalency that would substantially understate an employee's hours and thereby cause the employee not to be treated as full-time, or that would understate the hours of a substantial number of employees (even if no one employee is substantially understated). Final reg: 26 C.F.R. §54.4980H-3(b)(3)(i), (iii). The method may vary among reasonable classifications of employees, applied consistently.

A3.Categories with special or excluded treatment

Part 14, ch. 2, § A3

Certain hours are not counted: work performed as a bona fide volunteer for a government or tax-exempt entity (compensation limited to reimbursement of reasonable expenses, and reasonable benefits (including length-of-service awards) and nominal fees customarily paid by similar entities; §54.4980H-1(a)(7)); services by a student under a federal or state work-study program; services by members of religious orders who have taken a vow of poverty, while performing tasks usually required of active members; and compensation constituting foreign-source income. Preamble to T.D. 9655 (religious orders; the regulation itself excludes only volunteer, work-study, and foreign-source hours). For adjunct faculty, the preamble endorses, until further guidance, a method crediting 2¼ hours of service per hour of classroom teaching (representing class time plus preparation and grading) plus actual hours for required non-classroom duties. IRS guidance — informal: Preamble to T.D. 9655 (reasonable-method safe harbor); verify whether further guidance has issued.

A4.Whose employee is it

Part 14, ch. 2, § A4

§4980H liability follows the common-law employer, determined under the usual control test — not the entity that issues the paycheck. Final reg: 26 C.F.R. §54.4980H-1(a)(16); Case law and Rev. Rul. 87-41 factors. For staffing-agency workers who are the client's common-law employees, an offer made by the staffing firm is treated as made by the client employer only if the client pays a higher fee for an enrolled employee than for a non-enrolled one. Final reg: 26 C.F.R. §54.4980H-4(b)(2).

Part B — The Monthly Measurement Method

  1. B1MechanicsSubscribers
  2. B2Limited non-assessment periodsSubscribers

Part C — The Look-Back Measurement Method: Ongoing Employees

  1. C1The three periodsSubscribers
  2. C2Permitted categoriesSubscribers
  3. C3Method consistency and changesSubscribers

Part D — New Employees

  1. D1New employees reasonably expected to be full-timeSubscribers
  2. D2Variable-hour, seasonal, and part-time new hiresSubscribers
  3. D3Seasonal employee versus seasonal workerSubscribers
  4. D4Transition to ongoing-employee statusSubscribers
  5. D5Change in employment statusSubscribers

Part E — Leaves, Breaks, and Rehires

  1. E1Special unpaid leaveSubscribers
  2. E2Employment break periodsSubscribers
  3. E3Rehires and breaks in serviceSubscribers

Part F — Affordability Mechanics

  1. F1The measure and the three safe harborsSubscribers
  2. F2Applying the percentage, and what counts as the contributionSubscribers
  3. F3ICHRA affordabilitySubscribers
  4. F4Where affordability shows up in reportingSubscribers

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

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