Final Rules Issued on 90-Day Health Coverage Waiting Period Limitation

The U.S. Departments of Labor, Treasury, and Health and Human Services published their final regulations on implementing a waiting period for health coverage on February 24, 2014.  The final 90-day waiting period rules apply to plan years on or after January 1, 2015.

Specifically, a group health plan or group health insurance issuer (collectively a “group health plan”) cannot impose a “waiting period” that exceeds 90 days after an employee is “otherwise eligible for coverage.”

What is a “waiting period”?

  • It is the period that must pass before coverage for an individual who is otherwise eligible to enroll under the terms of a group health plan can become effective.

Must a group health plan have waiting period of 90 days?

  • No.  A group health plan can have no waiting period or a waiting period less than 90 days.  As long as coverage is effective within 90 days, a group health plan is in compliance even if an individual may take additional time to elect coverage.

Is coverage required?

  • No.  The rules do not require coverage be offered to any particular individual or class of individuals.

What does being “otherwise eligible to enroll under the terms of a group health plan” mean?

  • It means an individual has met the plan’s eligibility conditions.

Does 90 days mean 3 calendar months?

  • No.  Under the final regulations, 90 days means 90 days.  All calendar days are counted, including holidays and weekends.

What type of eligibility conditions are allowed?

  • Eligibility conditions, based solely on the lapse of a time period, are permissible as long as a time period is not more than 90 days. 
  • Eligibility conditions, not based solely on the lapse of a time period, are generally permissible unless the condition is designed to avoid compliance with the 90-day waiting period limitation.  
    • Examples include: a cumulative hours-of-service requirement that does not exceed 1,200 hours; being in an eligible job classification; or successfully completing a reasonable and bona fide employment based orientation period.

How long can an orientation last to be a valid eligibility condition?

  • The final regulations do not specifically address this question.  However, the federal agencies issued a new proposed regulation that would propose one month as the maximum length of any orientation period.  The 90-day waiting period limitation would begin on the first day after an employee completes a one month (or less than one month) orientation period.  
  • The proposed rule does not specify the facts and circumstances under which an employment-based orientation period would be considered “reasonable and bona fide.”  

What about eligibility conditions under multiemployer plans?

  • The Government recognizes the unique operating structure of multiemployer plans and has determined their eligibility conditions are in compliance. 
    • Examples include: allowing employees to become eligible for coverage by working hours of covered employment across multiple contributing employers; aggregating hours by calendar quarter and then permitting coverage to extend for the next full calendar quarter, regardless of whether an employee has terminated employment.

Through the end of plan year 2014, the government will consider compliance with proposed regulations to constitute compliance.

For more information about how the final regulations impact your plan, please contact your Trust Fund counsel.

By Linda Baldwin Jones | April 1, 2014

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