The Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services have issued final rules implementing the Affordable Care Act’s prohibition on requiring eligible workers to wait more than 90 calendar days (including weekends and holidays) for their employer-sponsored insurance to take effect.
The prohibition is effective for plan years beginning on or after January 1, 2014. The final rules were published in the February 24, 2014, Federal Register (79 Fed. Reg. 10296) and generally are effective for plan years beginning on or after January 1, 2015. Meanwhile, plans may rely on the proposed 90-day waiting period regulations issued March 21, 2013.
The ACA prohibits group health plans and group health insurance issuers from applying any waiting period that exceeds 90 days. It does not require an employer to offer coverage to any particular employee or class of employees, including part-time employees, but it bars an employer from requiring an otherwise eligible employee (or dependent) to wait more than 90 days before coverage under a group health plan becomes effective.
The final rules provide that being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions — e.g., being in an eligible job classification, achieving specific job-related licensure requirements, or satisfying a “reasonable and bona fide employment-based orientation period.” Eligibility conditions based solely on the lapse of time are permissible for no more than 90 days. Other conditions for eligibility not based solely on a lapse of time under the terms of a group health plan generally are permissible, unless the condition is designed to avoid compliance with the 90-day waiting period limitation. Therefore, if a group health plan or group health insurance issuer conditions eligibility on the completion by an employee (part-time or full-time) of 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.
A proposed rule that would limit the maximum duration of an otherwise permissible orientation period to one month also was published in the Federal Register on February 24, 2014. (79 Fed. Reg. 10320.) The proposed rule clarifies that one month would be the maximum allowed length of any “reasonable and bona fide” employment-based orientation period. The proposal states, “To ensure that an orientation period is not used as a subterfuge for the passage of time, or designed to avoid compliance with the 90-day waiting period limitation, an orientation period is permitted only if it does not exceed one month. For this purpose, one month is determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage.” Public comments on the proposal will be accepted until April 25, 2014.