The U.S. Departments of Labor, Treasury, and Health and Human Services announced the publication of final regulations implementing a 90-day limit on waiting periods for health coverage as part of the reform provisions of the Affordable Care Act on February 20, 2014. These regulations require that no group health plan or group health insurance issuer impose a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage. The rules:
Do not require coverage be offered to any particular employee or class of employees;
Are designed to ensure that eligibility conditions based solely on the passage of time are not used to evade the waiting period limit by stating that such conditions cannot exceed 90 days;
Include other permissible eligibility requirements, such as meeting certain sales goals, earning a certain level of commission, or successfully completing an orientation period;
Allow provisions requiring employees to complete a certain number of hours before becoming eligible for coverage as long as the requirement is capped at 1200 hours; and
Address situations in which it cannot be determined that a new employee will be working full-time.
Applicability Date: The 90-day waiting period limitation applies to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.
Other Clarifications Included in the Final Regulations That May Impact Employers:
The final regulations do not require a plan or issuer to have any waiting period, and the rules do not prevent a plan or issuer from having a waiting period that is shorter than 90 days. In fact, states could require shorter waiting periods, such as California’s 60-day rule.
If an employee can elect coverage that becomes effective on a date that does not exceed 90 days, then the coverage complies with the 90-day waiting period limitation, even if that employee takes additional time (beyond the end of the 90-day waiting period) to elect coverage.
If an employee enrolls as a late enrollee or special enrollee, any period before the late or special enrollment is not a waiting period.
All calendar days are counted for the 90-day period beginning on the enrollment date, including weekends and holidays.
Former employees who are rehired may be treated as newly eligible for coverage upon rehire so that a plan or issuer may require those employees to meet the plan’s eligibility criteria and to satisfy the plan’s waiting period, unless the termination and rehire are viewed as a method to avoid compliance with the 90-day waiting period limitation.
The same analysis of the rule would apply to an employee who moves to a job classification that is ineligible for coverage under the plan but then later moves back to an eligible job classification.
For variable hour employees who do not work a regular schedule to readily determine the 90-day waiting period, the plan may take a reasonable period of time, not to exceed 12 months and beginning on any date between the employee’s start date and the first day of the first calendar month following the employee’s start date, to determine whether the employee meets the plan’s eligibility condition.
According to the announcement, both the final and proposed rules will be published in the February 24, 2014 edition of the Federal Register.
By Laura Kerekes, SPHR, Chief Knowledge Officer for ThinkHR Corporation
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