What happens when you realize a part-time employee has actually been full-time, and no one flagged it?
You’ve just processed payroll for November and notice one of your “part-time” team members has averaged 35 hours a week for the last eight months. Should they have been offered health insurance? When? And what happens now that the deadline has passed?
What’s at stake if you get ACA measurement periods wrong?
If you're nearing or over the 50-employee threshold, you’re required to track employee hours accurately, and the IRS isn’t lenient. We’ve seen businesses hit with six-figure penalties simply for failing to monitor measurement periods correctly.
At Whirks, we’ve helped hundreds of employers create ACA compliance systems that run on autopilot.
We've also seen the costly mess when businesses wing it: missed deadlines, misclassified employees, and major audit stress.
In this article, you’ll learn the three biggest mistakes employers make with ACA measurement periods, and how to avoid them. By the end, you’ll know how to set up your system once, monitor it in minutes, and stay out of the IRS’s crosshairs.
How to Know if Your Business Must Follow ACA Measurement Period Rules
First, let's establish whether this even applies to your business.
If you're an Applicable Large Employer (ALE), which is defined as having 50 or more full-time equivalent employees on average over the previous calendar year, you're required to offer affordable health insurance and track who's eligible.
Here's how the math works: Count your employees for each month of 2025. Add up all 12 months and divide by 12. If your average number of full-time equivalent employees for the year is 50 or more, you're an ALE, and ACA measurement rules apply to you.
This means you need to be thinking about this now, not in December when you're already behind. Once you know you're an ALE, your next priority is making sure you’re measuring employee hours correctly, because mistakes here are what trigger penalties.
Why ACA Measurement Periods Are Important and What Happens When You Get Them Wrong
We know the IRS cares about your full-time employees, but they also care about part-time employees who work full-time hours.
That's where measurement periods come in.
Here's the requirement: You must monitor how many hours your part-time employees work. If a part-time employee averages 30 or more hours a week during a measurement period, the IRS considers them full-time, and you must offer them health insurance.
This prevents employers from gaming the system by classifying everyone as "part-time" to avoid offering benefits.
The IRS is strict on this, and the stakes are high. We've seen multiple six-figure penalties levied by the IRS for employers who didn't administer it correctly.
Top Three ACA Measurement Period Mistakes Employers Must Avoid
Once you understand how ACA measurement periods work and why they matter, the next step is making sure you’re administering them correctly.
Unfortunately, this is where many employers slip up, often without realizing it until penalties show up. Based on what we’ve seen working with hundreds of businesses, these are the three most common mistakes that lead to compliance failures, frustrated employees, and unexpected IRS fines.
Let’s walk through each one and show you how to avoid them.
Problem 1: Using a Short Measurement Period Creates Double the Work
Your measurement period can be anywhere from six months to 12 months (technically up to 13 months with a partial month).
Many employers choose shorter measurement periods thinking it will be easier. That's a mistake.
Here's why shorter periods create problems:
When you use a six-month measurement period, you're required to provide a "stability period" of equal or greater length. During a stability period, an employee cannot lose their coverage offer, even if their hours drop below full-time.
This creates a nightmare scenario: You're measuring employees every six months, which means you're potentially triggering new coverage requirements twice a year instead of once. That doubles your administrative burden and increases the chances you'll miss a deadline.
The solution: Use a 12-month measurement period.
A 12-month measurement period reduces your administrative burden and gives a more accurate picture of true full-time status. One busy season doesn't automatically trigger coverage requirements. Plus, you can align your ACA enrollment periods with your regular annual open enrollment, so you're only managing one enrollment process per year.
Problem 2: Missing Coverage Deadlines Can Trigger Thousands in Penalties
Once an employee becomes eligible during a measurement period, a clock starts ticking. You have approximately 60 days to offer them coverage.
Miss that deadline, and you're opening yourself up to penalties.
The problem is that most employers don't have systems in place to flag when someone exits a measurement period and becomes eligible. They're manually tracking spreadsheets, forgetting to check hours, or simply hoping their payroll reports will catch it.
(BTW, they don't.)
What happens when you miss the deadline? The IRS can assess penalties for every month you failed to offer coverage to an eligible employee, and those penalties can add up.
The solution: Automate the tracking.
Using a payroll-integrated platform that flags eligibility changes in real time takes this from a risky manual process to a five-minute monthly check. Don’t assume your payroll report or hours log will catch this. They rarely do.
Problem 3: Inconsistent ACA Rules Create a Reporting and Compliance Nightmare
Some employers try to be clever by shifting measurement period dates around, changing the length, or applying different rules to different employees based on department or hire date.
This only creates chaos.
If your measurement periods aren’t consistent and clearly defined, your ACA reports will be inaccurate, and the IRS will notice. Different employees are measured at different times. Coverage eligibility becomes a moving target. And when the IRS comes knocking for your ACA reporting (Forms 1094-C and 1095-C), you won't have clean data to provide.
The solution: Set it once, automate it, and stick to it.
Choose your measurement period dates from the start, mark them on your calendar, and use your payroll system to automate the tracking. From there, all it takes is a quick 5-minute monthly review.
Constantly changing dates or ignoring the process only creates confusion, missed deadlines, and avoidable penalties.
How to Set Up ACA Measurement Periods That Work
Based on everything we've seen working with employers, here's our recommendation:
Use a 12-month measurement period, followed by a 12-month stability period, with a 30-day administrative period in between.
Here's what that looks like in practice:
Step 1: Choose a consistent 12-month measurement period.
Most employers use the calendar year (January 1–December 31) to keep things simple.
Step 2: Monitor hours throughout that period.
Track whether part-time employees average 30+ hours per week during those 12 months.
Step 3: Use a 30-day administrative period to process the data.
After the measurement period ends, take up to 30 days to finalize who qualifies.
Step 4: Offer coverage during a 12-month stability period.
Employees who averaged full-time hours must remain eligible, even if their hours drop.
Step 5: Automate the tracking.
Your payroll system should flag employees exiting measurement periods automatically.
A 12-month measurement period, paired with automation, is the simplest and most accurate way to stay ACA compliant.
What to Know About ACA Rules for New Hires
Everything we've discussed applies to ongoing employees, but new hires have different rules.
If you hire someone as full-time:
You must follow your health plan's eligibility rules (typically 60 or 90 days). This requirement is separate from measurement periods.
If you hire someone as part-time:
You’ll place them into an initial measurement period to determine if they average 30 or more hours per week. If they do, you’ll need to offer coverage accordingly.
New hires follow different ACA rules based on whether they’re full-time or part-time at the time of hire. Confusing these can lead to compliance errors.
Set Up ACA Measurement Periods Correctly and Let Them Run Automatically
ACA measurement periods exist to prevent employers from misclassifying workers and dodging health insurance responsibilities.
But if you’re not measuring accurately, offering coverage on time, or keeping your process consistent, you're opening the door to expensive IRS penalties and employee frustration.
Now that you understand how to set up ACA measurement periods the right way, you’ll want to automate the process and ensure your reports stay clean.
At Whirks, we help employers do exactly that by building systems that track eligibility behind the scenes, flag employees when action is needed, and simplify ACA reporting at year-end.
If you’re unsure whether your current system is working, or you're about to cross the ALE threshold, let’s talk. We’ll help you get ACA compliance off your to-do list for good.
ACA compliance doesn’t have to be complicated, but it does have to be correct.
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