Final Rule Limits Health Care Enrollment Wait to 90 Days

News Updates


Related proposal addresses employment-based orientation periods 

A waiting period of no more than 90 days can be imposed before health coverage becomes effective for new employees who are otherwise eligible to receive coverage under their employer's plan according to a final rule under the Affordable Care Act (ACA) that federal agencies issued Feb. 20, 2014. The limit applies to both fully insured and self-insured group plans.

"This is a common sense measure that helps workers access employer-sponsored health insurance while providing employers flexibility," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi in a statement.

The final rule, to be published in the Feb. 24 Federal Register, applies to plan years beginning on or after Jan. 1, 2015.

Under the rule, after an individual is determined to be otherwise eligible for coverage under the terms of the plan, any waiting period may not extend beyond 90 days, and all calendar days are counted beginning on the enrollment date, including weekends and holidays.

If, under the terms of the plan, an individual may elect coverage that becomes effective on a date that does not exceed 90 days, the coverage will comply with the 90-day waiting-period limit even if the worker takes more time than that to choose coverage, the final rule states

The rule does not require the plan sponsor to offer coverage to any particular individual or class of individuals (such as part-time employees); rather, it prohibits requiring otherwise-eligible individuals to wait more than 90 days before coverage becomes effective.

Being otherwise eligible to enroll in a plan means having met the plan's substantive eligibility conditions (for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan's terms, or satisfying a reasonable and bona fide employment-based orientation period).

Other conditions for eligibility are generally permissible, such as meeting certain sales goals, earning a certain level of commission or successfully completing an orientation period. Additionally, organizations generally may require employees to complete up to 1,200 hours of service before they are eligible for coverage.

The final rule also address situations in which it cannot be determined that a new employee will be working full time.

Orientation-Period Limit Proposed

The federal agencies issued a related proposed rule that would limit the new-employment orientation period to one month. Also to be published in the Feb. 24 Federal Register, this proposal will be open for public comment until March 25, 2014.

If a group health plan conditioned eligibility on an employee’s having completed a reasonable and bona fide orientation period, this would be allowable if the orientation period did not exceed one month and the maximum 90-day waiting period began on the first day after the orientation period.

The final rule does not specify the facts and circumstances under which an employment-based orientation period would not be considered “reasonable and bona fide.” Under the proposed rule, one month would be the maximum for any reasonable and bona fide employment-based orientation period. During this period, the federal agencies envision that an organization and an employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin.

Under the proposed rule, one month would be 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. For example, if an employee’s start date in an otherwise-eligible position were May 3, the last permitted day of the orientation period would be June 2.

More to Come

In December 2010 the federal agencies overseeing health care reformclarified that the ACA's automatic-enrollment requirement for employer plans (originally to take effect in 2014) would not become effective until after they issued regulations implementing the requirement; those regulations were still pending.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

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