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A 90 Day Waiting Period Outlined by Health Care Reform

The Affordable Care Act prohibits a group health plan (both grandfathered and not) or insurance carrier from imposing a waiting period that exceeds 90 days for plan years beginning on or after January 1, 2014. In light of the health care reforms the IRS, DOL and HHS  released temporary guidance regarding the 90-day waiting period limitation. This guidance provides a detailed explanation on how different eligibility conditions affect the maximum waiting period.

What is a waiting period?

In the guidelines provided, a waiting period is defined as “the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.”  Additionally,  health care reform does not require employers to offer coverage to specific employees or a class of employees, which includes those who work part-time. This regulation prevents an otherwise eligible employee, or dependent, from having to wait for a period longer than 90 days for their coverage to become active.  The important part of these health care reform requirements is that as of 2014, employers with 50 or more employees may be penalized under the employer mandate if they don’t offer coverage, or if they offer coverage that is not considered affordable.  Full-time employees may receive coverage through the Exchange.

Who is eligible under health care reform?

Also included in the employee mandate guidance are the eligibility conditions that determine whether an employee must recieve coverage within the waiting period of 90 days. Generally, other conditions for eligibility are acceptable so long as they are not meant to avoid compliance with health care reform’s 90-day requirement.  The  guidance also clarifies that a plan or carrier will not have violated this provision because an employee takes additional time to elect coverage. If, under a given plan’s terms, an employee elects coverage that would begin on a date that does not exceed the 90-day waiting period limitation, the regulation is satisfied.

How do regulations work for new employees?

For newly hired employees, it could take longer to determine whether the employee meets the plan’s eligibility conditions, including a measurement period that fits within the permitted guidelines, even if the employer is not considered a large employer subject to the employer penalty. In general, this period will not be considered to be a means by which employers are avoiding compliance with the 90-day waiting period limitation if the coverage is effective no later than 13 months from the employee’s start date or, if the employee’s start date is not the first day of a calendar month, the time remaining until the first day of the next calendar month.

Although this guidance is temporary through 2014, it is important to make sure your organization is in compliance with health care reform regulations.  For additional guidance and advice please feel free to call us, 212.695.7495.

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Arthur Grutt