Various federal agencies have issued proposed regulations on the new Affordable Care Act (ACA) requirement that prohibits group health plans and health insurance issuers offering group health insurance coverage from imposing any waiting period that exceeds 90 days. A waiting period is defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. The new regulations implement this requirement, as well as amend existing requirements – such as preexisting condition limitations and other portability provisions added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) – to conform them to other ACA provisions. Some key elements of the proposal are as follows:
- The proposed regulations are consistent with – and no more restrictive on employers than – guidance previously issued in August 2012. Therefore, plans may follow either the earlier guidance or proposed regulations through at least the end of 2014.
- The proposed regulations prohibit requiring eligible participants and beneficiaries from having to wait more than 90 days for their coverage to become effective. They do not, however, require a plan sponsor to offer coverage to any particular employee or class of employees, such as part-time employees.
- A waiting period does not include the time before an employee or dependent enrolls as a late enrollee or special enrollee. Existing HIPAA regulations govern the effective dates of coverage for special enrollment.
- All calendar days are included in the 90-day period, including weekends and holidays. The enrollment date counts as day one of the waiting period.
- Being eligible to enroll in a plan means having met the plan’s substantive eligibility conditions. Eligibility provisions that are based on compensation, for example, are substantive eligibility provisions that are not designed to avoid compliance with the 90-day waiting period limitation, and are thus permissible.
- With respect to variable-hour employees where benefit eligibility is based on a specified number of hours worked, the proposed regulations explain that “if a group health plan conditions eligibility on an employee regularly having a specified number of hours of service per period (or working full-time), and it cannot be determined that a newly-hired employee is reasonably expected to regularly work that number of hours per period (or work full-time), the plan may take a reasonable period of time to determine whether the employee meets the plan’s eligibility condition, which may include a measurement period of no more than 12 months that begins on any date between the employee’s start date and the first day of the first calendar month following the employee’s start date.” Generally, so long as coverage for a variable-hour employee is made effective within 13 months of an employee’s start date, the eligibility criteria will not be viewed as a means of thwarting the 90-day waiting period limitation.
- As for eligibility for cumulative hours-of-service requirements, the proposed rule stipulates that if a group health plan or health insurance issuer conditions eligibility on any employee’s (part-time or full-time) having completed a number of cumulative hours of service, the eligibility condition is not considered to be designed to avoid compliance with the 90-day waiting period limitation if the cumulative hours-of-service requirement does not exceed 1,200 hours. The waiting period must start once the new employee satisfies the plan’s cumulative hours-of-service requirement and may not exceed 90 days. The proposal emphasizes that this is a one-time eligibility requirement.
- A health insurance issuer can rely on the eligibility information reported to it by the employer or plan sponsor.
- The rules affect both grandfathered and non-grandfathered group health plans and health insurance issuers offering group health coverage. The rules take effect for plan years beginning on or after January 1, 2014.
The agencies invite comments on these proposed regulations. Among other topics, the agencies are interested in whether additional examples or provisions are needed to address multiemployer plans, and the applicability dates. Comments are due within 60 days of the proposal’s publication in the Federal Register, which is scheduled for March 21, 2013. Comments must be identified by the phrase “waiting periods” and they may be submitted electronically through the federal eRulemaking portal, or by mail or hand-delivery to: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention: Waiting Periods.