Specific to Lookback Measurement Method

Specific to Lookback Measurement Method Designed to be an addendum to an SPD ABC CO.

EMPLOYEE BENEFITS PLAN

APPENDIX A Look-Back Measurement Method

This Appendix, effective [January 1, 2015], describes the [Plan’s or Group Medical Feature’s] eligibility provisions applicable to employees who are not eligible to Participate in the [Plan or Group Medical Feature] solely because they are not regularly scheduled to work at least [30] hours per week. In the event there is a conflict between Appendix A and another Plan provision, the Plan terms will control; provided that it is the intention of the Employer that this Appendix A be given effect to the fullest extent possible.

A. DEFINITIONS

Terms defined in the Plan shall have the same meanings when used in this Appendix, except as provided below. In addition, the following words and phrases shall have the meanings stated:

“Break in Service” means a period of:  [Thirteen (13) or Twenty Six (26)] consecutive weeks (or more) during which an Employee has no, and is not credited with any, Hours of Service, or  At the Plan Administrator’s discretion, four (4) consecutive weeks (or more) during which an Employee has no, and is not credited with any, Hours of Service, if the period with Hours of Service is greater than the immediately preceding period of employment.

“Code” means Internal Revenue Code of 1986, as amended, and regulations issued thereunder or pursuant thereto.

“Employee” means a person currently performing services under the Employer’s control, except for employees in the following categories: employees covered by a collective bargaining agreement to which the Plan Sponsor is a party and which does not provide for participation in the Plan; “leased employees” within the meaning of Code Section 414(n); individuals who are classified by the Plan Sponsor as temporary workers, interns, co-ops, independent contractors, or consultants; individuals from whom the Plan Sponsor does not withhold federal income and employment taxes from such person’s compensation.

“Employer” means the Plan Sponsor.

“Hours of Service” means an hour for which an Employee is (A) paid, or entitled to payment, for the performance of duties for the Employer, or (B) entitled to payment by the Employer due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.

“Initial Administrative Period” means the [one (1)] month period beginning immediately after the end of the Initial Measurement Period and ending immediately before the start of the Initial Stability Period. The Initial Administrative Period also includes the period between a new Employee’s hire date and the beginning of the Initial Measurement Period, to the extent that the Initial Measurement Period does not begin on the new Employee's date of hire.

“Initial Measurement Period” means the period beginning on the first day of the calendar month following the Employee’s start date and ending [twelve (12)] months later. The Employer shall measure the Employee’s Hours of Service during the Initial Measurement Period as described in Paragraph B of this Appendix.

“Initial Stability Period” means the period of time beginning immediately after the Initial Administrative Period, and ending [twelve (12)] months later.

“Ongoing Employee” means an Employee who has been employed by the Employer for at least one complete Standard Measurement Period.

“Part-time Employee” means a new Employee who is not regularly scheduled to work [30] hours per week or more, and whom the Employer reasonably expects at the time of hire to work on average less than 30 Hours of Service per week during the Initial Measurement Period.

“Seasonal Employee” means an Employee who is hired into a position for which the Employer determines that the customary annual employment is six months or less and at approximately the same time each year.

“Standard Administrative Period” means the period beginning immediately after the end of the Standard Measurement Period and ending immediately before the start of the Standard Stability Period.

“Standard Measurement Period” means the [twelve (12)] month period beginning with [October 15 of year 1] and ending [October 14 of year 2]. The Employer shall measure an Ongoing Employee’s Hours of Service during the Standard Measurement Period as described in as described in Paragraph B of this Appendix. “Standard Stability Period” means the [Plan Year] immediately following the end of a Standard Measurement Period and Standard Administrative Period.

“Variable Hour Employee” means a new Employee who is not regularly scheduled to work 30 hours or more per week, and with respect to whom, based on the facts and circumstances at the Employee’s start date, the Employer cannot reasonably determine whether the Employee will average at least 30 Hours of Service per week over the Initial Measurement Period because the Employee’s hours are variable or otherwise uncertain.

A. ELIGIBILITY

An Employee not otherwise eligible for the [Plan or Group Medical Feature] solely because he or she is not regularly scheduled to work at least [30] hours per week shall be eligible for Plan participation on:

 For an Ongoing Employee, the first day of the Plan Year following the end of the Standard Measurement Period in which the Employee averaged at least 30 Hours of Service per week.  For Part-time, Variable Hour and Seasonal Employees, if the Employee averages at least 30 Hours of Service per week during the Initial Measurement Period, such Employee will be eligible as of the first day of the Initial Stability Period, which shall be no later than the first of the month following 13 consecutive months after the Employee’s date of hire. However, if the Employee experiences a change in employment status during the Initial Measurement Period such that, had the Employee begun employment in the new position or status, the Employee would have been expected to work at least 30 Hours of Service per week (and would not have been a Seasonal Employee), the Employee will be eligible for Plan benefits as soon as administratively practicable, but no later than the first day of the fourth full calendar month following the change, or, if earlier, the first day of the Initial Stability Period after an Initial Measurement Period during which the Employee averages at least 30 Hours of Service.

The Employer intends to use the look-back measurement method in Treas. Reg. §54.4980H-3(d) to determine which Ongoing, Part-Time, Variable Hour, and Seasonal Employees are eligible for benefits under the [Plan or Group Medical Feature]. However, the Employer retains its discretion to determine who is eligible for benefits. A person that the Employer classifies as not a full-time employee shall not be eligible to participate in the Plan’s benefits, regardless of whether such person is determined by a court, the IRS or other regulatory authority to be full-time under Treas. Reg. §54.4980H.

To the extent that the eligibility rules in this Appendix A do not address a specific eligibility issue, the Employer shall have discretion to make eligibility determinations consistent with applicable law and regulations, including special rules for changes in employment status and special unpaid leaves of absence. The following Employees are not eligible to participate in the [Plan or Group Medical Feature] under the look-back measurement method:

 Part-Time, Variable Hour, or Seasonal Employees who have not averaged at least 30 Hours of Service per week during the Initial Measurement Period;  Ongoing Employees who have not worked an average of at least 30 Hours of Service per week at the end of the most recent Standard Measurement Period;  Leased employees, as defined in Code section 414(n);  Employees in an employee unit covered by a collective bargaining agreement between Employee representatives and one or more Employers if this Plan’s benefits were the subject of good faith bargaining between the Employee representatives and the Employer, unless such agreement provides for coverage for such bargaining employees in the Plan; and  Nonresident aliens who receive no earned income (within the meaning of the Code section 911(d)(2)) from an Employer that constitutes income from sources within the United States, as defined in Code section 861(a)(3).

Notwithstanding the foregoing, if an Employee returns to work after an unpaid leave of absence without a Break in Service, the Employee will be eligible for benefits upon return if the Employee returns during an Initial Stability Period or Standard Stability Period in which the Employee is eligible for Plan benefits under Paragraph B of this Appendix A. If the Employee returns to work after a Break in Service, the Employee will be treated as an Employee who has not worked an entire Standard Measurement Period to the extent permissible by law, except that the Employee will not be treated as an Employee who has not worked an entire Standard Measurement Period if the Employee is returning to work after a leave that is for jury duty, FMLA leave, USERRA leave, state mandated or job projected leave, or any approved leave of absence.

To the extent that the Plan and/or a Plan feature’s provider contracts and/or other plan documents refer to the eligibility of “employees,” only individuals classified as “employees” by the Plan Sponsor are eligible to participate in such Plan feature. Independent contractors, freelancers and individuals hired through staffing firms shall not be eligible even if they are subsequently determined to be common law employees for any purpose, including without limitation, for wage, labor or tax purposes by the Internal Revenue Service, the Department of Labor or any other Federal or state agency, administrative body or court. Any such determination should have a prospective effect only.

If an Employee in an Initial Stability Period or Standard Stability Period fails to pay the Employee’s share of the cost of coverage on a timely basis, coverage under the [Plan or Group Medical Feature] shall terminate on the date that payment is due, provided that the employee will have a grace period of 30 days from the date the payment is due to remit payment. Another Sample Designed as a Standalone Policy Employees Under Code §4980H and Eligible Employees Under the XYZ Group Health Plan 1. Preliminary Matters 1.1 Purpose The Plan Sponsor is adopting this Policy for purposes of identifying Full-Time Employees with respect to Code §4980H and for purposes of identifying Eligible Employees with respect to the XYZ Group Health Plan (Plan).1 1.2 Relationship Between Full-Time Status and Eligibility All Employees who are determined to be Full-Time Employees with respect to a given period of time are Eligible Employees under the Plan during that period of time. 1.3 Modification This Policy is established as a part of the Plan and may be modified or amended in the same manner as the Plan. 2. Plan Sponsor Elections 2.1 Election to Use Look-Back Measurement The Plan Sponsor elects to use the Look-Back Measurement Method with respect to all Employees for purposes of identifying those Employees who are Full-Time Employees, which also identifies those Employees who are Eligible Employees.2 2.2 Election of Standard Measurement Period The Standard Measurement Period is a 12-month period beginning November 1 each year and ending the following October 31.3 2.3 Election of Standard Stability Period The Standard Stability Period is the 12-month period beginning January 1 each year and ending the following December 31.4 The same Standard Stability Period applies with respect to Employees who are determined to be Full-Time Employees during the Standard Measurement Period and Employees who are determined not to be Full-Time Employees during the Standard Measurement Period. 2.4 Election of Standard Administrative Period The Standard Administrative Period is the 61-day period beginning on November 1 each year and ending the following December 31.5 2.5 Election of Initial Measurement Period With respect to a New Employee who is a Part-Time Employee, Variable-Hour Employee, or Seasonal Employee, the Initial Measurement Period is the 12-month period beginning on the first day of the calendar month following the Employee’s Start Date.6 2.6 Election of Initial Stability Period With respect to a New Employee who is a Part-Time Employee, Variable-Hour Employee, or Seasonal Employee, except as provided in Section 3.2(b)(4), the Initial Stability Period is the 12-month period beginning on the first day of the second calendar month after the end of the Initial Measurement Period.7 2.7 Election of Initial Administrative Period With respect to a New Employee who is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee, the Initial Administrative Period means all periods of time between the Employee’s Start Date and the beginning of the Employee’s Initial Stability Period other than the Employee’s Initial Measurement Period.8 2.8 Election to Apply Rule on Midyear Change to Part-Time Status The special rule in Treas. Reg. §54.4980H-3(f)(2) regarding certain Full-Time Employees changing employment status in the middle of a stability period applies. Therefore, in the case of a Full-Time Employee to whom this section applies, the Employee ceases to be a Full-Time Employee on the last day of the third calendar month after the change in employment status described in this section. This section applies to a Full-Time Employee if:  (a) The Employer has offered the Employee minimum value coverage continuously during the period beginning on the first day of the calendar month following the Employee’s initial three full calendar months of employment and ending on the last day of the calendar month in which the change in employment status described in this section occurs;9  (b) The Employee has a change in employment status to a position or status in which the Employee would not have reasonably been expected to be a Full-Time Employee if the Employee had begun employment in that position or status; and  (c) The Employee actually is credited with less than 130 Hours of Service for each of the three full calendar months following such change in employment status. 2.9 Taking Special Unpaid Leave Into Account For purposes of determining an Employee’s average Hours of Service during a Measurement Period, the average Hours of Service for that Measurement Period are determined by computing the average after excluding any periods of Special Unpaid Leave during that Measurement Period and by using that average as the average for the entire Measurement Period. 3. Identification of Full-Time Employees and Eligible Employees 3.1 Ongoing Employees  (a) Employees Determined to Be Full-Time. An Ongoing Employee who is determined to be a Full-Time Employee during a Standard Measurement Period will be considered a Full-Time Employee, and thus an Eligible Employee, for each calendar month during the Standard Stability Period associated with that Standard Measurement Period, except to the extent the special rule in Treas. Reg. §54.4980H-3(f)(2) applies (see Section 2.8 of this Policy).  (b) Employees Determined Not to Be Full-Time. An Ongoing Employee who is determined not to be a Full-Time Employee during a Standard Measurement Period will not be considered a Full-Time Employee, and thus not an Eligible Employee, for any calendar month during the Standard Stability Period associated with that Standard Measurement Period.10 3.2 New Employees  (a) New Full-Time Employees. A New Employee who is reasonably expected at his or her Start Date to be a Full-Time Employee (and is not a Seasonal Employee) is considered a Full-Time Employee, and thus an Eligible Employee, beginning on the Employee’s Start Date. o (1) Factors for Determining Full-Time Status. Although no single factor is determinative, the following factors may be relevant in determining whether a New Employee who is not a Seasonal Employee is reasonably expected at his or her Start Date to be a Full-Time Employee: . (A) Whether the Employee is replacing an Employee who was (or was not) a Full-Time Employee. . (B) The extent to which Hours of Service of Ongoing Employees in the same or comparable positions have varied above and below an average of 30 Hours of Service per week during recent Measurement Periods. . (C) Whether the job was advertised or otherwise communicated to the Employee or otherwise documented (for example, through a contract or job description) as requiring hours of service that would average 30 or more Hours of Service per week or less than 30 Hours of Service per week. o (2) Transition to Ongoing Employee. Once a New Employee who is a Full- Time Employee has been employed for an entire Standard Measurement Period, the Employee becomes an Ongoing Employee, and the Employee’s status as a Full-Time Employee and as an Eligible Employee is governed by the provisions of this Policy regarding Ongoing Employees.  (b) New Non-Full-Time Employees. A New Employee who is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee is not initially considered a Full-Time Employee and will have Hours of Service measured over an Initial Measurement Period and be treated as follows:11 o (1) Full-Time After Initial Measurement Period. If a New Employee who is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee is determined to be a Full-Time Employee during the Employee’s Initial Measurement Period based on the Hours of Service credited during the Initial Measurement Period, the Employee will be considered a Full-Time Employee, and thus an Eligible Employee, for each calendar month during the Employee’s Initial Stability Period. o (2) Not Full-Time After Initial Measurement Period. If a New Employee who is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee is determined not to be a Full-Time Employee during the Employee’s Initial Measurement Period based on the Hours of Service credited during the Initial Measurement Period, the Employee will not be considered a Full-Time Employee, and thus not an Eligible Employee, during the Employee’s Initial Stability Period, except to the extent provided under the provisions of this policy regarding Ongoing Employees. 12 o (3) Change in Status During the Initial Measurement Period. Notwithstanding the foregoing, if a New Employee who is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee experiences a change in employment status before the end of the Employee’s Initial Measurement Period such that if the Employee had begun employment in that new status the Employee would have reasonably been expected to be a Full-Time Employee (and not a Seasonal Employee or Variable-Hour Employee), the Employee will be considered a Full-Time Employee, and thus an Eligible Employee, beginning on the first day of the calendar month after the change in the Employee’s employment status or, if earlier, at the beginning of the Employee’s Initial Stability Period, if the Employee is determined to be a Full-Time Employee during the Employee’s Initial Measurement Period. o (4) Transition to Ongoing Employee. Once a New Employee who is a Part- Time Employee, Seasonal Employee, or Variable-Hour Employee has been employed for an entire Standard Measurement Period, the Employee becomes an Ongoing Employee, and the Employee’s status as a Full-Time Employee, and thus as an Eligible Employee, is governed by the provisions of this Policy regarding Ongoing Employees, but subject to the following: . (A) Full-Time During the Initial Measurement Period but Not the First Standard Measurement Period. If the Employee is determined not to be a Full-Time Employee for the Standard Measurement Period that overlaps or immediately follows the Employee’s Initial Measurement Period, the Employee will continue to be considered a Full-Time Employee, and thus an Eligible Employee, for each calendar month during the Initial Stability Period, if the Employee was determined to be a Full-Time Employee during the Employee’s Initial Measurement Period. . (B) Full-Time During the First Standard Measurement Period but Not During the Initial Measurement Period. If the Employee is determined to be a Full-Time Employee for the Standard Measurement Period that overlaps or immediately follows the Employee’s Initial Measurement Period, the Employee will be considered a Full-Time Employee, and thus an Eligible Employee, for each calendar month during the entire Standard Stability Period associated with the Employee’s first Standard Measurement Period, even though that Standard Stability Period may overlap an Initial Stability Period associated with an Initial Measurement Period during which the Employee was determined not to be a Full-Time Employee. . (C) Full-Time During Both the Initial Measurement Period and the First Standard Measurement Period. If the Employee is considered a Full-Time Employee, and thus an Eligible Employee, during both the Employee’s Initial Stability Period and the Employee’s first Standard Stability Period, the Employee will be considered a Full- Time Employee, and thus an Eligible Employee, during any period between the end of the Initial Stability Period and the beginning of the Employee’s first Standard Stability Period. 3.3 Rehired Employees An Employee who is terminated and rehired will be treated as a New Employee upon rehire only if the Employee was not credited with an Hour of Service with the Employer or any member of the Controlled or Affiliated Group for a period of at least 13 consecutive weeks immediately preceding the date of rehire or, if less, a period of consecutive weeks that exceeds the greater of (a) four weeks, or (b) the number of weeks of the Employee’s immediately preceding Period of Employment.13 For purposes of applying these rehire rules, the duration of the Period of Employment immediately preceding a period during which an Employee was not credited with any Hours of Service is determined after application to that Period of Employment of the rules on Special Unpaid Leave, if and to the extent those rules are applicable. 4. Definitions and Interpretation 4.1 Definitions For purposes of this Policy, the following terms have the following meanings:  (a) “Administrative Period” means a Standard Administrative Period or an Initial Administrative Period.  (b) “Code” means the Internal Revenue Code of 1986, as amended.  (c) “Controlled or Affiliated Group” means the group of organizations consisting of the Plan Sponsor and any other organization that is part of a controlled group or affiliated service group with the Plan Sponsor within the meaning of Code §414(b), (c), (m), or (o).  (d) “Eligible Employee” has the meaning set forth in the Plan.  (e) “Employee” has the meaning set forth in the Plan.  (f) “Employer” means the Plan Sponsor and any other member of the Controlled or Affiliated Group that has adopted this Plan for the benefit of the Employer’s employees.14  (g) “Full-Time Employee” means an Employee of the Employer who is credited with an average of at least 30 Hours of Service per week during a Measurement Period. For this purpose, 130 Hours of Service in a calendar month is treated as the monthly equivalent of at least 30 Hours of Service per week. 15  (h) “Hour of Service” means (1) each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer, and (2) each hour for which an Employee is paid, or entitled to payment, by the Employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence (as defined in 29 CFR §2530.200b-2(a)). o (1) The term “Hour of Service” does not include any hour for services to the extent the compensation for those services constitutes income from sources without the United States, within the meaning of Code §§861 through 863 and the regulations thereunder. o (2) An Hour of Service for one organization is treated as an Hour of Service for all other organizations that are part of the same Controlled or Affiliated Group for all periods during which those organizations are part of the same Controlled or Affiliated Group. o (3) Hours of Service for all Employees are credited using actual Hours of Service from records of hours worked and hours for which payment is made or due.16  (i) “Initial Administrative Period” means, with respect to a New Employee that is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee, the period described in Section 2.7 of this Policy.  (j) “Initial Measurement Period” means, with respect to a New Employee that is a Part-Time Employee, Seasonal Employee, or Variable-Hour Employee, the period described in Section 2.5 of this Policy.  (k) “Initial Stability Period” means, with respect to a New Employee that is a Part- Time Employee, Seasonal Employee, or Variable-Hour Employee, the period described in Section 2.6 of this Policy.  (l) “Look-Back Measurement Method” means the method of identifying full-time employees for purposes of Code §4980H that is described in Treas. Reg. §54.4980H-3(d), as amended or supplemented.  (m) “Measurement Period” means an Initial Measurement Period or a Standard Measurement Period.  (n) “New Employee” means an Employee who has been employed for less than one complete Standard Measurement Period.  (o) “Ongoing Employee” means an Employee who has been employed for at least one complete Standard Measurement Period.  (p) “Part-Time Employee” means a New Employee whom the Employer reasonably expects to be employed on average less than 30 Hours of Service per week during the Employee’s Initial Measurement Period, based on the facts and circumstances at the Employee’s Start Date. Although no single factor is determinative, the following factors may be relevant in determining whether a New Employee is a Part-Time Employee: o (1) Whether the Employee is replacing an Employee who was (or was not) a Full-Time Employee. o (2) The extent to which Hours of Service of Ongoing Employees in the same or comparable positions have varied above and below an average of 30 hours of service per week during recent Measurement Periods. o (3) Whether the job was advertised or otherwise communicated to the new hire or otherwise documented (for example, through a contract or job description) as requiring hours of service that would average 30 (or more) Hours of Service per week or less than 30 Hours of Service per week.  The anticipated length of the Employee’s Period of Employment shall not be considered.  (q) “Period of Employment” means the period of time beginning on the first date for which an Employee is credited with an Hour of Service for an Employer or any member of the Controlled or Affiliated Group and ending on the last date on which the Employee is credited with an Hour of Service for that Employer or any member of the Controlled or Affiliated Group, both dates inclusive. An Employee may have one or more Periods of Employment with the same Employer.  (r) “Plan” means the XYZ Group Health Plan.  (s) “Plan Sponsor” means the XYZ Company.  (t) “Policy” means this “Policy for Identifying Full-Time Employees Under Code §4980H and for Identifying Eligible Employees Under the XYZ Group Health Plan,” as amended and in effect from time to time.  (u) “Seasonal Employee” means a New Employee who is hired into a position for which the customary annual employment is six months or less, occurring at approximately the same time each year.  (v) “Special Unpaid Leave” means unpaid leave that is subject to FMLA, subject to USERRA, or on account of jury duty.  (w) “Stability Period” means either a Standard Stability Period or an Initial Stability Period.  (x) “Standard Administrative Period” means the period described in Section 2.4 of this Policy.  (y) “Standard Measurement Period” means the period described in Section 2.2 of this Policy.  (z) “Standard Stability Period” means the period described in Section 2.3 of this Policy.  (aa) “Start Date” means the first date on which an Employee is credited with an Hour of Service with the Employer or a member of the Controlled or Affiliated Group.  (bb) “Variable-Hour Employee” means a New Employee if, based on the facts and circumstances at the Employee’s Start Date, the Employer cannot determine whether the Employee is reasonably expected to be employed on average at least 30 Hours of Service per week during the Initial Measurement Period because the Employee’s hours are variable or otherwise uncertain. For purposes of determining whether an Employee is a Variable-Hour Employee, the Employer may not take into account the likelihood that the Employee may terminate employment before the end of the Initial Measurement Period. Although no single factor is determinative, the following factors may be relevant in determining whether a New Employee is a Variable-Hour Employee: o (1) Whether the Employee is replacing an Employee who was a Full-Time Employee or a Variable-Hour Employee. o (2) The extent to which the Hours of Service of employees in the same or comparable positions have actually varied above and below an average of 30 hours of service per week during recent Measurement Periods. o (3) Whether the job was advertised or otherwise communicated to the new Employee or otherwise documented (for example, through a contract or job description) as requiring hours of service that would average at least 30 hours of service per week, average less than 30 hours of service per week, or might vary above and below an average of 30 hours of service per week. 4.2 Terms Defined in the Plan Capitalized terms not specifically defined in this Policy have the meanings set forth in the Plan. 4.3 Interpretation of Terms Whenever the context may require, (a) any pronoun used in this policy includes the corresponding masculine, feminine, or neuter forms, and (b) the singular form of nouns, pronouns, and verbs includes the plural and vice versa. 1 Editor’s Note: This sample policy assumes that the employer has determined that it is an applicable large employer within the meaning of Code §4980H. 2 Editor’s Note: This sample policy assumes that the employer is using the look-back measurement method with respect to all of its employees. Other options include using the monthly measurement method for all employees or using the look-back measurement method for some employees (e.g., hourly employees) and using the monthly measurement method for other employees (e.g., salaried employees). If an employer wishes to distinguish between groups of employees, only four categories of distinctions are permissible: collectively bargained and noncollectively bargained employees, employees covered by different collective bargaining agreements, salaried and hourly employees, and employees whose primary places of employment are in different states. The same rules must be applied to all employees within a given category. Each employer must evaluate which approach is best suited to its circumstances. 3 Editor’s Note: This sample policy assumes a 12-month standard measurement period, but other lengths of standard measurement periods are permitted. See Treas. Reg. §54.4980H-3(d)(1)(ii) for rules on defining the standard measurement period by reference to payroll periods that include the beginning and end dates of the measurement period. If the employer intends to implement the transition rule allowing for a shorter first standard measurement period with respect to stability periods beginning in 2015 (see Shared Responsibility for Employers Regarding Health Coverage, 79 Fed. Reg. 8543, 8572 (Feb. 12, 2014)), the following additional language (adjusted to reflect the specific periods chosen by the employer) should be added to Section 2.2: “Notwithstanding the foregoing, the first Standard Measurement Period will be the period beginning [May 1, 2014] and ending [October 31, 2014].” 4 Editor’s Note: This sample policy assumes a 12-month stability period, which is required with a 12-month measurement period. The standard stability period could also be defined to mean the “plan year,” if the employer intends to align the standard stability period with the plan year. 5 Editor’s Note: A different period may be selected, but in no event may the standard administrative period exceed 90 days. 6 Editor’s Note: This is one example for defining the initial measurement period. Defining the initial measurement period to begin on the first day of a month offers some administrative convenience because there will be only 12 initial measurement periods to track each year. This sample policy does not use the option of defining the initial measurement period by reference to payroll periods (see Treas. Reg. §54.4980H-3(d) (3)(ii)). 7 Editor’s Note: Although there are other options for defining the initial stability period, it generally must be the same length as the standard stability period. The approach in this sample policy is intended to allow for at least one month between the end of the initial measurement period and the beginning of the initial stability period, for enrollment and other administrative activities. 8 Editor’s Note: In no event may the initial administrative period exceed a total of 90 days. In addition, the total period between an employee’s start date and the beginning of the employee’s initial stability period may not exceed 13 months plus a fraction of a month. 9 Editor’s Note: This rule cannot be applied to employees who are not offered coverage during an initial measurement period that is longer than three months because, by definition, those employees will not have been offered coverage by the first day of the first calendar month following three months of employment. 10 Editor’s Note: This provision assumes that employees who are identified as not full- time under the look-back measurement method during the standard measurement period will not be eligible for coverage during the entire standard stability period. More favorable eligibility provisions could be offered. 11 Editor’s Note: This assumes new non-full-time employees will not be eligible for coverage any sooner than after completion of the initial measurement period. A more favorable eligibility provision could be offered. 12 Editor’s Note: This provision assumes that employees who are identified as not full- time under the look-back measurement method during the initial measurement period will not be eligible for coverage during the entire initial stability period, except to the extent required after the employee transitions to an ongoing employee. More favorable eligibility provisions could be offered. 13 Editor’s Note: This provision on rehired employees does not address the special rules that apply to rehired employees of educational organizations. This provision does incorporate the “rule of parity” described in Treas. Reg. §54.4980H-3(d)(6)(iv). 14 Editor’s Note: This definition assumes each member of the controlled or affiliated group applies the look-back measurement method in the same manner as the plan sponsor. 15 Editor’s Note: This definition of Full-Time Employee tracks the definition provided in the statue and governing regulations. Informal comments from the IRS indicate that the IRS will follow the regulatory standard of 130 hours per month, rather than the statutory standard of 30 hours per week. See ABA Joint Committee on Employee Benefits, meeting with IRS and Treasury officials, Q/A-24 (May 9, 2014) (as visited Sept. 19, 2014). For purposes of applying the look-back measurement method in the manner described in this sample policy, the outcome will be the same whether the standard used is 30 hours per week or 130 hours per month. But employers should be mindful of any situations where it could make a difference (e.g., when applying the monthly measurement method). 16 Editor’s Note: For salaried employees, in lieu of crediting actual hours of service, it is generally permissible to use one of two equivalency methods (8 hours per day or 40 hours per week). If an equivalency method is used, it should be stated in the employer’s policy.