BlogsUsing the Safe Harbor Method to Determine Benefit Eligibility

August 19, 2015, by Matt Hanson

Providing benefits to your employees seems simple, right? Set up some plans, let them choose, and you become the best boss. But then you have to determine which of your employees are full-time and who receives these great benefits. With the Supreme Court upholding the Affordable Care Act, it is imperative to know which employees work enough to qualify for benefits. For those that may not work exactly 40 hours every week, the Safe Harbor method is a great way to help determine the full-time employees in your business.

What is the Safe Harbor method? Under the Safe Harbor method, there are three defining time periods for variable-hour employees.

  • Standard Measurement Period: The standard measurement period is the time used to average hours for an employee’s status. This length can be anywhere from three to 12 months. This means the employer can choose to average an employee’s hours based on that chosen time period and determine whether or not they have been working full-time.
  • Administrative Period: The administrative period takes place after the standard measurement period. Up to 90 days after the standard measurement period, the employer can analyze the hours of the employee to determine their full-time status.
  • Stability Period: After the administrative period, the employer provides benefits to the employee for the same time as determined in the standard measurement period. For example, if the employee’s status was based on their average hours for the previous three months, they will be given benefits for the following three months. Part-time and full-time may change as the months go on, but their benefits are locked in for that period.

The Safe Harbor method is a great way to help categorize your employees into hourly and salary. Confused yet? That’s okay. We understand this process can have many unclear lines. That’s why we at Centennial are here to help. Ready to get started on providing your employees with the best benefits? For more information, contact us or download our White Paper today.