Summer often provides HR and benefits teams with a valuable opportunity to step back from the busy enrollment and reporting cycles and review key compliance processes before open enrollment preparations begin in earnest. One area that deserves attention is the administration of eligibility waiting periods.
Eligibility waiting periods determine when employees become eligible to enroll in employer-sponsored benefits. While these rules may seem straightforward, errors in waiting period administration can create compliance concerns, employee relations issues, and administrative headaches.
Under the Affordable Care Act (ACA), employers generally may not impose a waiting period that exceeds 90 calendar days. A waiting period is the period of time that must pass before an otherwise eligible employee can enroll in coverage. Once an employee satisfies the plan’s eligibility requirements, coverage must become available no later than the 91st day.
Summer is an ideal time to review how eligibility rules are being applied in practice. New hires from earlier in the year have likely completed their waiting periods, allowing employers to verify that coverage was offered timely and that enrollment processes worked as intended. It also provides an opportunity to identify and correct any administrative issues before they affect a larger group of employees during the upcoming plan year.
Problems often arise when eligibility rules are not clearly documented or are applied inconsistently. For example, an employee may be hired on a date that does not align with the employer’s standard benefits enrollment schedule, or a manual onboarding process may result in delayed enrollment opportunities. In some cases, employers may unintentionally apply different waiting periods to similarly situated employees.
Employers should also review how waiting periods interact with variable-hour and seasonal employee eligibility rules. Organizations using the ACA look-back measurement method must ensure that waiting periods are coordinated properly with measurement and administrative periods. Misalignment between these processes can lead to compliance risks and employee confusion.
A summer review should include:
Eligibility waiting periods may not receive the same attention as ACA reporting or open enrollment, but small administrative errors can have significant consequences. Taking time during the summer months to review eligibility practices can help employers identify issues early, improve administrative efficiency, and ensure employees receive timely access to the benefits for which they are eligible.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.