In keeping with the ever-expanding guidance on health care reform, the government released proposed regulations addressing the requirement that group health plans and insurers cannot apply a waiting period for participation that lasts longer than 90 days.
The proposed regulations define a waiting period as the time that must pass before coverage becomes effective for an employee or dependent who is otherwise eligible for coverage under the terms of the plan. Employers are entitled to set eligibility requirements for coverage (such as limiting coverage to a certain class or designation of employee). Once the person meets the eligibility requirements, however, coverage for the employee and dependents must be effective on the 91st day after eligibility. "Days" for this purpose means calendar days- weekends and holidays are counted. If coverage begins only on the first day of a month, then the waiting period cannot be extended and coverage must be effective as of the first day of the month that falls within the 90 day period.
The guidance clarifies that plans are permitted to require employees to work a certain number of hours to be eligible for health coverage. The hours worked cannot exceed 1,200, and may only be applied on a one-time (not annual) basis. The guidance also explains how new employees will be treated when a plan requires a certain number of hours worked for eligibility. In this case, a plan can use a measurement period of up to 12 months to determine if the employee satisfies plan eligibility. If he does, the plan will not violate the 90 day waiting period limitation if coverage is effective for that employee no later than 12 months from the employee’s start date, plus the time to the first day of the following month.
While this new proposed guidance is helpful for employers who impose a waiting period for coverage, all employers will still have to remember that the Affordable Care Act’s pay or play rules may limit the ability to place eligibility restrictions on employees who are considered “full time” for benefits purposes. Once finalized, the guidance will be helpful for making sure any waiting period for coverage complies with health care reform mandates.
