To ensure your company is compliant with ACA regulations, it is essential that you accurately report full-time employees to determine:

  • Whether your company is considered an Aggregated Large Employee (ALE) and, therefore, required to provide health insurance benefits; and
  • Which employees are eligible for health insurance and should be offered coverage in order to avoid a penalty.


For the purpose of ACA reporting, a full-time employee is any employee who, in a given calendar month, worked an average of at least 30 hours per week or over 130 hours in a single month.


There are two methods you can use to determine whether an employee was considered full-time in a particular month:

  • The monthly measurement method – Using this method, you determine an employee’s full-time eligibility on a month-by-month bases, depending on whether the employee worked at least 130 hours.
  • The look-back measurement method – Using this method, you determine an employee’s status based on their work performed during the prior measurement period. Using this method, employees remain eligible or ineligible for a set period of time, known as a stability period, regardless of any month-to-month changes in work hours, and they must be reevaluated at the end of each measurement period to determine their eligibility for the next stability period.


Note: The look-back method is only used to determine individual employee eligibility for coverage. It cannot be used to determine an employer’s ALE status. 


For more information on each method of reporting, see the IRS resource ESRP regulations.


An hour of service includes any hour in which an employee was paid or was entitled to payment, for such activities as working or providing a service for the company, vacation time, holiday time, sick-time, disability, layoff, jury duty, covered military service, or covered leave of absence.


In certain circumstances, individuals may perform work for your company that is not considered hours of service and does not need to be included in your measurement. Those could include:

  • Volunteer work for a tax-exempt organization or government entity,
  • Work provided through a federal work study or similar program,
  • Work performed by and for members of religious orders, and
  • Work compensated and taxed by a non-US source.


ACA Guidelines also recognize that it may be difficult to track work hours for certain types of employees, such as adjunct faculty, employees who are compensated for layover hours (ex. airline employees), and employees who perform on-call hours. In such cases, employers should use a “reasonable method” for calculating these hours of service.


This information is provided as a resource only. ACA Track cannot provide legal or tax advice.  For specific guidelines and requirements, see the IRS resources Questions and Answers and ESRP regulations or speak to your tax advisor and/or legal counsel.