Final Regulations: Group Health Plan 90-day Waiting Period Limitation
Who: All group health plans and health insurance plans (grandfathered and non-grandfathered).
When: For plan years beginning on or after January 1, 2015. Plan years beginning in 2014 can comply with either the proposed regulations or the final regulations. (Final Regulations: February 20, 2014)
What: A group health plan may not have a waiting period that exceeds 90 days. The term ''waiting period'' is defined as "the period that must pass . . . before the individual is otherwise eligible to be covered for benefits..."
“Otherwise eligible” means meeting the plan’s eligibility conditions, which can include satisfying a “reasonable and bona fide employment-based orientation eligibility period.” In addition, if an individual enrolls as a late enrollee or special enrollee, any period after eligibility and before the late or special enrollment is not counted as a waiting period.
Executive Summary: Waiting periods based solely on “lapse of a time” cannot be more than 90 days. Eligibility NOT based solely on “lapse of a time” are also permissible, unless it is designed to avoid compliance with the 90 day limitation. For example, an employer may use:
1. A “reasonable and bona fide employment-based” orientation period as a condition for eligibility for coverage under a plan. The regulations suggest that one month is acceptable as an orientation period. This can proceed the waiting period without violation of the 90 day requirement.
2. An extended time period for determining whether a variable-hour employee meets the plan’s eligibility condition. It will not be considered designed to avoid compliance with the 90-day waiting period limitation if coverage is made effective no later than 13 months from the employee's start date.
3. Cumulative hours of service to determine eligibility. It will not be considered designed to avoid compliance with the 90-day waiting period limitation if the cumulative hours-of-service requirement does not exceed 1,200 hours.
4. A restart of the eligibility criteria for a re-hired former employee. (Termination and rehire cannot be a subterfuge to avoid compliance with the 90-day waiting period limitation).
A Multiemployer plan with a collective bargaining agreement may use an working hours across multiple contributing employers. Because these are unique operating structures, it will not be considered designed to avoid compliance with the 90-day waiting period limitation.
A group health plan not in compliance with the waiting period requirements will be subject to an excise tax of $100 per day per failure.
Actions: Employer Plan sponsors should consult with their agent, broker, plan consultant, legal counsel, or Human Resources Department to assure they are incompliance with the waiting period requirements. You should also be sure you qualify for and follow the specific rules for an waiting periods beyond 90 days.
The information presented and contained within this article was submitted by Ronald E. Bachman, Chairman of the IHC Editorial Advisory Board and President & CEO of Healthcare Visions. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations in your state. Any opinions expressed within this document are solely the opinion of the individual author.