The U.S. Departments of Health and Human Services, Labor, and Treasury have released a joint set of proposed regulations implementing the requirement in the Patient Protection and Affordable Care Act that group health plans and health insurance issuers offering group health insurance cannot apply a waiting period that exceeds 90 days. The proposed regulations make the rules regarding 90-day waiting periods consistent with previously-issued regulations implementing the employer pay-or-play penalties.
Under the proposed regulations, a waiting period is defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible under the terms of the group health plan can become effective. While plan sponsors can impose substantive eligibility requirements for coverage (e.g., full-time employment) without restriction under the proposed regulations, waiting periods based solely on the passage of time cannot exceed 90 days. Coverage for otherwise eligible employees and dependents must become effective on the 91st day. If the commencement of coverage is tied to the first day of the month, no extension is permitted. Thus, in that case, the waiting period cannot be extended to the first day of the month following the completion of a 90-day wait.
In the event that a plan requires a certain number of hours of service in a period as an eligibility requirement (e.g., 30 hours per week), the proposed regulations provide some flexibility for new employees who are hired in variable hour provisions. In these circumstances, the plan sponsor may apply a measurement period of up to 12 months to determine whether the new variable hour employee satisfies the eligibility conditions. If the variable hour employee is eligible, the plan will not violate the 90-day waiting period requirement if coverage is effective no later than 13 months from the employee's start date plus, if the employee's start date is not the first day of the month, the time remaining until the first day of the following month.
Finally, plans may require the completion of a specified number of hours to become eligible for health coverage. The proposed regulations indicate that the specified number of hours cannot exceed 1,200, and can only be imposed on a one-time (as opposed to an annual) basis.