The Affordable Care Act provides that for plan years beginning on or after January 1, 2014, a health plan cannot apply any waiting period that lasts more than 90 days. A waiting period is a period of time that must pass before an individual is eligible to be covered for benefits under the plan or before coverage for an individual becomes effective under the plan.
The U.S. Departments of Labor, Health and Human Services and Treasury recently released guidance on what will be considered compliance with the 90-day waiting period requirement. This guidance defines the maximum period that may pass before an individual who is otherwise eligible for a plan has effective coverage under the plan.
If the terms of a plan allow an employee to elect coverage within the 90 day waiting period limitation, the plan would satisfy the limitation period. A plan will not be considered to violate the Affordable Care Act merely because employees take additional time to elect coverage.
If a health plan conditions eligibility on an employee regularly working a certain number of hours (or working full-time), and it cannot be determined if a newly hired employee is reasonably expected to work the required hours, the plan is permitted to take a reasonable period of time to determine if the employee meets the plan's eligibility conditions. This determination may coordinate with the measurement period used for evaluating full-time status for avoidance of the pay or play penalty. See our article dated September 13, 2012.
The new guidance confirms that generally, the time period for determining whether an employee meets the plan's eligibility conditions will not be considered to be designed to avoid compliance with the waiting period rules if coverage is effective for the employee no later than 13 months from the employee's start date. If the employee's start date is not the first day of a calendar month, the time period can be pushed off until the first day of the next calendar month.
Employers may rely on the new guidance at least through the end of 2014.
