This article provides ten frequently asked questions (FAQs) on the Affordable Care Act's 90-Day Waiting Period rule.
The Affordable Care Act (ACA) mandates that coverage under a group health plan be made available to “otherwise eligible” employees and their dependents no later than 90 calendar days from an employee’s eligibility date. The 90-day Waiting Period provision applies to employers of all sizes and all plan types, including grandfathered plans and self-insured plans. The provision takes effect on the first day of the new plan year in 2014.
The Final Rule on the 90-day Waiting Period was issued on February 20, 2014.
10 FAQs on the 90-Day Waiting Period Rule
The final regulations provide that a group health plan, and a health insurance issuer offering group health insurance coverage, may not apply a Waiting Period that is longer than 90 calendar days. If an individual can elect coverage that becomes effective on a date that does not exceed 90 calendar days, the coverage will comply with the 90-day Waiting Period limitation.
1) Is there a requirement to have a Waiting Period?
No. Nothing in the final regulations requires a plan or issuer to have a Waiting Period or prevents a plan or issuer from having a Waiting Period that is shorter than 90 calendar days.
2) Can the Waiting Period be shorter than 90 days?
Yes. Nothing in the final regulations prevents a plan or issuer from having a Waiting Period that is shorter than 90 calendar days.
3) Is it required to offer coverage to all classes of employees?
No. The 90-day Waiting Period limitation generally does not require the plan sponsor to offer coverage to any particular individual or class of individuals (including, for example, part-time employees). Instead, the final regulations prohibit requiring individuals who are otherwise eligible to wait more than 90 calendar days before coverage becomes effective.
4) Do you count all calendar days, or only work days?
According to the final regulations, all calendar days are counted toward the 90 days, including weekends and holidays. Other eligibility conditions (referred to as “Substantive Eligibility Conditions”) are still permitted as long as they are not based solely on the lapse of time. The 90 days does not start until the other Substantive Eligibility Conditions (see #5 below) are satisfied.
5) What are the Substantive Eligibility Conditions?
Substantive Eligibility Conditions would include such conditions as being in an eligible job classification, achieving job-related licensure requirements that are specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period (see #6 below).
6) Are new employee “orientation periods” allowed?
Included within the final regulations were additional proposed regulations that expanded on the “orientation periods” allowed under the new guidance. The “bona fide employment-based orientation period” is described as a period in which the employer and employee evaluate whether the employment situation is satisfactory and standard orientation and training process begin. The new proposed regulations provide that the maximum length of the orientation period would be one month.
The addition of the orientation period would allow an employer to offer coverage on the first day of the month following a 90 calendar-day Waiting Period and also allow coordination with the coverage start dates so as to avoid penalties under the final employer shared responsibility regulations.
7) Can we base eligibility on hours worked?
According to the final rule, an eligibility condition requiring completion of a cumulative number of hours is permissible if the required hours do not exceed 1,200 hours. This rule is intended to be a one-time eligibility requirement and cannot be imposed on the same individual as an annual eligibility condition.
When eligibility is conditioned on an employee working a specified number of hours per period (per week, per month or per quarter for example), and the employer cannot determine if a newly hired employee is expected to regularly work the specified number of hours per period, the final regulations allow the use of an initial measurement period of up to 12 months to determine whether a new employee averages enough hours to be eligible for coverage. When using this rule, coverage must be available to an employee satisfying the eligibility condition no later than 13 months after the employee’s start date plus the time, if any, remaining until the first day of the next calendar month.
8) Does the 90-day Waiting Period rule apply to Integrated HRAs?
Yes. The 90-day Waiting Period rule applies to Integrated Health Reimbursement Arrangements (HRAs). An employer will want to design its plan so that the effective date for an Integrated HRA matches the waiting period for the employer’s group health plan to be sure the HRA meets the definition for an Integrated HRA.
An Integrated HRA is defined as an HRA where eligibility requirements for the HRA include the employee being enrolled in a group health plan.
9) Does the 90-day Waiting Period rule apply to Healthcare Reimbursement Plans?
Yes. The 90-day Waiting Period rule applies to Healthcare Reimbursement Plans (HRPs), as HRPs are defined as an employer-sponsored Section 105 self-insured health plan.
10) What if an employee takes longer than 90-days to elect coverage, enrolls in a special enrollment period, or enrolls in HIPAA?
A plan will not be considered to violate the Waiting Period rules merely because individuals may take additional time (beyond the end of the 90-day waiting period) to elect coverage.
The final rule also clarifies that, if an individual enrolls as a late enrollee or special enrollee under HIPAA, any period before the late or special enrollment is not a Waiting Period. The effective date of coverage for special enrollees continues to be that set forth in the HIPAA special enrollment regulations.