The ACA includes specific “break-in-service” rules to determine whether a returning employee is treated as a new hire or a continuing employee for the purposes of health coverage.
This is important for Applicable Large Employers (ALEs) who need to track full-time status and coverage eligibility.
🔄 13-Week Rule (Standard Rule)
If an employee terminates employment and returns after a break of at least 13 consecutive weeks, the employer may treat them as a new employee for ACA purposes.
This means:
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The employer can apply a new waiting period
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The employer can restart measurement periods (if using the look-back method)
đź“š 26-Week Rule (Educational Institutions Only)
For schools and other educational employers, the break must be 26 weeks to restart the clock—unless the employer chooses to use the rule of parity.
⚖️ Rule of Parity (Optional Alternative)
An employee may be treated as a new hire if the break in service is at least 4 weeks, and longer than their prior period of employment.
Example: Worked 3 weeks, left, and returned 5 weeks later? Can be treated as a new hire.
🧠Why It Matters:
If the break is too short and the employee is treated as continuing, coverage must be reinstated immediately if they were previously enrolled, with no new waiting period.