For plan years beginning on or after January 1, 2014, a health plan may not impose an eligibility waiting period of greater than 90 days.
Note: The restriction on waiting periods only applies to certain types of health plans, such as major medical insurance. It does not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. Click here for more information about the types of benefits that are exempt from the ACA plan design mandates.
Waiting Periods Hot Topics & FAQs
- Guidance on Waiting Period Limits:
Proposed regulations provide guidance on the requirement that limits waiting periods for plan years beginning on or after January 1, 2014. The regulations clarify that eligibility conditions that are based solely on the lapse of time are permissible for no more than 90 days. However, if a group health plan conditions eligibility on having worked a specified number of hours during a period (or working full-time), and it cannot be determined whether a newly-hired employee is reasonably expected to regularly work the required number of hours, the employer may utilize a measurement period as described in the proposed Free Rider Penalty regulations to determine whether an employee has met the plan’s eligibility criteria. The “measurement period” (as described in connection with the Free Rider Penalty) is not considered a waiting period under the rule that limits waiting periods to 90 days.
An eligibility condition may not be designed to avoid compliance with the 90-day waiting period limitation. The time period for determining whether an employee is full time will not be considered to avoid the 90-day waiting period limitation if coverage can become effective no later than 13 months from the employee’s date of hire, plus the time remaining until the first day of the next calendar month (if the employee’s start date is not the first day of a calendar month). The proposed regulation includes a number of examples illustrating the application of these rules and may be relied upon at least through 2014.
Finally, the proposed regulations proved that notices of creditable coverage will not be required after December 31, 2014.
- May plans impose longer waiting periods for part-time employees?
Answer: No. The ACA law does not require plans to cover part-time employees. However, if a plan does cover part-time employees, the waiting period for these employees may not exceed 90 days. Working full-time versus part-time is a bona fide employment-based condition that an employer may use to distinguish eligible and non-eligible classes of employees. If a group health plan conditions full-time status (and therefore plan eligibility) on having worked a specified number of hours during a period, and it cannot be determined whether a newly-hired employee is reasonably expected to regularly work the required number of hours, employers may (but are not required to) utilize the method from either Notice 2012-59 or the proposed regulation (summarized above) to determine whether a newly-hired employee expected to work variable hours has met the plan’s eligibility criteria.
American Fidelity Assurance Company does not provide tax or legal advice.