Insight to Action

Why Year-Long Measurement and Stability Periods

31 March 2015

The IRS regulations regarding the employer mandate allow measurement periods between 3 months and 12 months and stability periods between 6 months and 12 months, with the one rule that the stability period must be at least as long as the measurement period. We recommend to all of our clients using a 12 month measurement and stability period. Why?

Chiefly, you don't want to do this more often than you have to. Measurement periods are a chore, and ideally you would only run a measurement period report once.

Year-long stability periods is how most plans have operated up to this point. Think of the stability period as the effective period for your benefits, which typically runs from January 1 – December 31. A shorter stability period means that you could have employees becoming eligible and ineligible mid-year creating cafeteria plan election issues.

Year-long measurement periods iron out seasonal differences and idiosyncratic spikes in the hours worked of per diems and other variable-hour employees.