A Limited Non-Assessment Period is a period of time where your company is not subject to the ACA penalties for not offering health coverage. There are several types of Limited Non-Assessment Periods that can occur.
First year as Applicable Large Employer (ALE)
The first year an employer is an ALE has a limited non-assessment period from January to March. However, this limited assessment period only applied to employees who were not offered health coverage by the employer at any time during the previous calendar year.
For example, it's Dec 2016 and Acme Co. now has more than 50 full-time employees. On Jan 1, 2017, Acme Co is now considered an ALE. From Jan 1 - Mar 31, 2017, Acme Co does not need to offer health coverage for any full-time employee that was not offered health coverage in 2016. On Apr 1, 2017, Acme Co is now obligated to offer health coverage, as the limited non-assessment period has ended.
First calendar month of employment
If the employee’s first day of employment is a day other than the first day of the calendar month, then all of the employee’s first calendar month of employment is a Limited Non-Assessment Period.
For example, if an employee is hired on Mar 5, then the limited non-assessment period for that employee is Mar 1 - 31.
Hiring a full-time employee
If a new-hire employee is reasonably expected to be a full-time employee on his start date, you must offer him health plan coverage no later than the end of the employee's third full month of employment.
For example, if you hire John Doe on Mar 5, 2017, a full-time employee, you have Apr 1 - Jun 30 (3 full months of employment) where the employer does not need to offer health coverage.
Hiring a variable hour, seasonal or part-time employee
If a new-hire employee is a variable hour, seasonal, or part-time employee, then the initial measurement period (12-months) used to determine if they are full-time, and the following admin (2 months) where the employer should offer coverage is considered a limited non-assessment period.
For example, if you hire John Doe on Mar 5, 2017, his limited non-assessment will be as follows:
- first calendar month of employment: Mar 1 - Mar 31, 2017
- and initial measurement period (12 months): Apr 1, 2017 - Mar 31, 2018
- and initial admin period (1 month): Apr 1 - 30, 2018
John Doe's total limited non-assessment will be from Mar 1, 2017 - Apr 30, 2018.
Changing an employee from Part-Time to Full-Time during an initial measurement period
There's a limited non-assessment period when you change an employee from part-time to full-time during that employee's initial measurement period.
This limited non-assessment period applies when:
- The ALE employer is using the look-back measurement method
- and the employee was hired as a variable hour employee, seasonal employee or part-time employee
- and the employee's employment type changes from part-time to full-time (or there's an employment change that would have the employee start working over 30 hours per week).
The limited non-assessment period begins on the date that the employee's status was changed to full-time and can end on:
- on the last day of the third full month following the change
- or the start of the employee's initial stability period
Whichever one comes first.
For example, if you hire John Doe on Mar 5, 2017, as a part-time employee and don't offer health coverage. On Jun 10, 2017, you change his employment type from part-time to full-time. The limited non-assessment period will be from Jun 10, 2017 (change effective date) to Sept 28, 2017 (3 full-months after the change was made).
Alternatively, if the change from part-time to full-time was made on Mar 3, 2018, the limited non-assessment period would be from Mar 3, 2018 (change effective date) to Apr 30, 2017 (initial stability start date).