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Wednesday, February 26, 2014
by Sean Forbes
health plans or health insurance issuers offering group health insurance
coverage can't apply a waiting period that exceeds 90 days for individuals to
be eligible for benefits coverage under terms of their plans, according to new
final regulations under the Affordable Care Act and released jointly by three
guidance, T.D. 9656, sets forth rules governing the relationship between a
plan's eligibility criteria and the 90-day waiting period limitation, and is
effective April 25.
a common sense measure that helps workers access employer-sponsored health
insurance while providing employers flexibility,” Phyllis C. Borzi, assistant
secretary of the Department of Labor's Employee Benefits Security
Administration, said Feb. 20 in a DOL news release.
regulations apply to plan years beginning on or after Jan. 1, 2015. They were
released Feb. 20 and published in the Feb. 24 Federal Register (79 Fed. Reg.
10,296, 2/24/14) by the Treasury Department's Internal Revenue Service,
Department of Health and Human Services and EBSA.
years beginning in 2014, the agencies will consider compliance with either the
IRS, HHS and EBSA rules proposed in 2013 (REG-122706-12), 3or these final
regulations, to constitute compliance with the ACA.
regulations continue to define “waiting period” as 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. Nothing in the final regulations
requires a plan or issuer to have any waiting period, or prevents a plan or
issuer from having a waiting period that is shorter than 90 days, the agencies
with the final regulations, the three agencies simultaneously released proposed
regulations (REG-122706-12) intended to clarify the maximum allowed length of
any reasonable employment-based orientation period, consistent with the 90-day
waiting period limitations added by the ACA.
rules say that being otherwise eligible to enroll in a plan means having met
the plan's eligibility conditions, including satisfying a “reasonable and bona
fide employment-based eligibility period.”
rules also provide that a former employee who is rehired can be treated as
newly eligible for coverage and, therefore, a plan or issuer may require that
individual to meet the plan's eligibility criteria and satisfy the plan's
waiting period again.
eligibility and waiting period requirements must be reasonable under the
circumstances, the agencies said. For example, the termination and rehire can't
be used as a subterfuge to avoid compliance with the 90-day waiting period.
analysis would apply for an individual who moves to a job classification that
is ineligible for coverage under the plan but then later moves back to an
eligible job classification, the agencies said.
rules include a provision allowing health insurance issuers to rely on
eligibility information supplied by an employer or other plan sponsor.
insurance issuers will comply with the rule if both of the following conditions
issuer requires the plan sponsor to make a representation regarding the terms
of any eligibility conditions or waiting periods imposed by the plan sponsor
issuer has no specific knowledge of the imposition of a waiting period that
would exceed the permitted 90-day period.
agencies also proposed rules that would provide that one month is the maximum
allowed length of any reasonable and bona fide employment-based orientation
agencies said the proposed rules are necessary, because the final rules don't
specify the facts and circumstances under which an employment-based orientation
period wouldn't be considered “reasonable and bona fide.”
agencies said that during an orientation period they envision that an employer
and employee could evaluate whether the employment situation was satisfactory
for each party, and standard orientation and training processes would begin.
proposed rules, one month would be determined by adding one calendar month and
subtracting one calendar day, measured from the employee's start date in a
position that is otherwise eligible for coverage.
example, the agencies said if an employee's start date in an otherwise eligible
position is May 3, the last permitted day of the orientation period would be
isn't a corresponding date in the next calendar month after adding a calendar
month, the last permitted date in the orientation period would be the last day
of the next calendar month, the agencies said.
proposed rules were also published in the Feb. 24 Federal Register (79 Fed.
Reg. 10,320, 2/24/14).
on the proposed rules must be received by April 25.
Excerpted from a story that ran in Pension & Benefits Daily (2/20/2014).
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