The short answer is probably not. Employers often cannot automatically cancel medical benefits just because the employee changes to a part-time position. The long answer, which we will explore, depends on factors such as employer size, the measurement method being used, and employee tenure.
Employer Size
As a refresher, the ACA’s employer mandate applies to employers with 50 or more employees (including part-time employees or full-time equivalent employees) in the previous calendar year. If the employer mandate applies, the employer may have an obligation to continue to offer medical coverage for a period of time even after the change to a part-time position. If the employer mandate does not apply, coverage would end once the employee no longer meets the plan’s eligibility criteria.
Type of Measurement Method
Assuming the employer is subject to the employer mandate, we next look at the type of measurement method the employer uses. Employers can use either the monthly measurement method, where eligibility status is determined each month, or the look-back measurement method, where the employer measures working hours for a period of time (usually 12 months) and makes an offer of coverage based on average hours worked during that time. As a reminder, the ACA considers an employee to be full-time if they work 30 hours/week or 130 hours/month; this is true even if the employer defines full-time as 35 or 40 hours per week for other HR or benefit purposes.
If the employer uses the monthly measurement method, once the employee moves to a part-time position and is no longer scheduled to work the required full-time hours, the employee would lose eligibility. COBRA should be offered once eligibility is lost. The employer must continue to monitor the employee each month and make an offer of coverage if the employee returns to full-time hours for a month. This process can be an administrative burden, so typically, employers with part-time employees will use the look-back measurement method.
The look-back measurement method analyzes an employee’s hours over a period of time. The most common length is 12 months, although an employer could use a shorter look-back period, such as six months. Notably, under the look-back measurement method, once the employee is determined to be either full-time or part-time, they retain that status for the entire stability period. The stability period is the length of time that matches the look-back (again, most commonly it would be 12 months) and usually aligns with the benefit plan year. If an employee is in their stability period, even if the employee experiences a status change to a part-time position, eligibility may not be lost until the end of that stability period. Therefore, employers cannot automatically cancel coverage just because an employee switches to part-time. While there are nuanced rules that could allow eligibility to end sooner than the end of the stability period, employers should understand that analysis is needed before terminating eligibility.
Employee Tenure
The final variable in the analysis is employee tenure. The change in status rules discussed in the previous section is impacted by tenure if the employer uses the look-back measurement method. Employers using this method must establish both an initial measurement period (for new hires, i.e., employees who have not yet been employed for the employer’s standard measurement period) and a standard measurement period (for ongoing employees). The change in status rules depends on whether the employee in question is in the initial measurement period or the standard measurement period. An employee experiencing a status change during the initial measurement period may lose eligibility sooner than one in the standard measurement period, since the employee’s standard measurement period would be locked into their status during the stability period.
Employer Takeaway
Employers often assume they can cancel medical coverage once the employee moves to a part-time position that is not benefits eligible. As you can see, the rules are not simple, especially if the employer uses the look-back measurement method. Employers should work closely with their ACA tracking and reporting vendor to ensure they understand the measurement method in place and how a change in status works based on the chosen measurement method.
For more information on ACA measurement method requirements, please ask your broker or consultant for a copy of the NFP publication ACA: Employer Mandate Measurement Methods. Additionally, the upcoming March 18, 2026, Get Wise Wednesdays webinar “How Do You Measure Up? A Refresher on ACA Employer Mandate Measurement Methods” will tackle this topic and provide real-world examples on how the change in status rules work in practice; interested employers can register now.