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The U.S. Departments of Treasury, Labor, and Health and Human
Services (“the Departments”) have published a proposed rule to amend the ACA
regarding the 90-day waiting period limitation provision (“the provision”).
Employers and health insurance companies may rely on the ruling through
Section 2708 of the ACA mandates that employers may not impose an enrollment waiting
period longer than 90 days for eligible employees and their dependents. Employers
will be considered compliant with the provision as long as employees can enroll
in the group’s health coverage within 90 days of eligibility.
Group plans including self-insured and fully-insured plans (both
grandfathered and non-grandfathered) with plan year coverage beginning on or after
January 1, 2014 must comply with the provision.
According to 2004 HIPAA regulations, a “waiting period” is and will continue to
be defined as:
period of time that must pass before coverage for an employee or dependent, who
is otherwise eligible to enroll under the terms of the plan, can become
In order for an employee to be eligible for coverage, he or she
must satisfy any and all job-specific requirements as specified in the plan’s
terms. For example, a broker may require his or her assistants to obtain a life
and health license before becoming eligible for health coverage.
Have Some Flexibility
In general, employers may impose conditions of eligibility as long as their
goal is to not avoid the 90-day waiting limit. The proposed rules provided the
following guidance regarding conditional eligibility for variable-hour
employees and cumulative hours-of-service employees.
eligibility condition refers to an employee who needs to consistently work a
specific number of hours per period (or working full time). If it cannot be
determined that an employee is reasonably expected to regularly work the specified
number of hours, an employer may take a certain period of time (no more than 12
months) to determine the employee’s plan eligibility. This measurement period
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.
An employer will be considered compliant if the
employee’s coverage is effective no later than 13 months from the employee’s
The measurement period defined for
determining eligibility for variable-hour employees is consistent with the
timeframe permitted under the employer “pay or play” mandate (Section 4980H).
Employers may require an employee to work a certain number of hours, less
than or equal to 1,200 cumulative hours, before becoming eligible for
enrollment. The waiting period (not to exceed 90 days) must begin once the employee
satisfies the plan’s cumulative hours-of service requirement to be considered eligible
for plan enrollment.
IMPORTANT:While the 90-day waiting period provision 1) allows employers to apply a substantive
eligibility condition and 2) does not require employers to provide coverage to
any particular employee, including part-timers, employers with 50 or more
full time equivalents (FTEs) who do not offer coverage to an eligible employee
may be liable for a tax penalty.
more about large employers, possible tax penalties, and how to define employee
classes, click here »
Counting the Days
The proposed rule provided the following guidelines to count the 90 days correctly:
- Count all calendar days including the date of
- Holidays and weekends must be included in the
- If the 91st day falls on a holiday or
a weekend, the employer should consider adjusting the waiting period to stay in
- The effective date for coverage may not be later
than the 91st day.
The Ripple Effect
The provision will render HIPAA and ERISA regarding
pre-existing conditions obsolete. Currently, 2004 HIPAA regulations
permit limited exclusions of coverage based on pre-existing conditions.
The ACA will prohibit issuers from imposing pre-existing
condition exclusions on group policies (on plan year) and individual policies (on
policy year) beginning on or after January 1, 2014. However, for children under
the age of 19, this restriction has been in place since September 23, 2010.
Therefore, HIPAA regulations (Section 9801), and ERISA (Section 701) will be
amended in the near future to remove the pre-existing condition provisions.
The Kick-off Date
In general, the 90-day provision will be effective for groups with plan
year coverage beginning on or after January 1, 2014. In other words, groups
need to comply by their renewal date. Let’s look at some examples:
ABC Company has a new group policy with a March
1, 2013 effective date. The provision will be effective March 1, 2014.
123Company has a December 1, 2013 renewal date.
The provision will be effective December 1, 2014.
1. Employers should check their waiting periods to ensure the waiting
period does not exceed 90 days. For example, employers with a “first of the
month following 90 days” waiting period may consider changing it to “1st
of the month following 60 days”.
2. Employers should review and amend plan documents, update
summary plan descriptions, and revise employee communications as needed for
The GA in Your
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Counting to 90: ACA and the Waiting Period
Federal Register: Ninety-Day Waiting
Period Limitation and Technical Amendments to Certain Health Coverage
Requirements Under the Affordable Care Act
IRS: Guidance on 90-Day Waiting Period Limitation Under
Public Health Service Act § 2708
McDermott Will & Emery: ACA Guidance on 90-Day Waiting Periods and Certificates of Creditable
Tower Watson: PPACA 90-Day Waiting Period Proposed Regulations Issued
is provided for informational purposes only and is not intended as tax or legal
advice. While every intention has been made to provide accurate
information, please consult with the actual regulations.