Guidance on ACA 90-Day Waiting Periods Issued in Tri-Agency Final, Proposed Rules

Group 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 federal agencies.         

The 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.         

“This is 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.                  

The final 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.         

Waiting Period          

For plan 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.         

The final 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 said.         

Along 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.         

The final 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.”         


The final 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.         

The 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.         

The same 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.         

Health Insurance Issuers          

The final rules include a provision allowing health insurance issuers to rely on eligibility information supplied by an employer or other plan sponsor.         

Health insurance issuers will comply with the rule if both of the following conditions are satisfied:

• the issuer requires the plan sponsor to make a representation regarding the terms of any eligibility conditions or waiting periods imposed by the plan sponsor and
• the issuer has no specific knowledge of the imposition of a waiting period that would exceed the permitted 90-day period.       

Orientation Period          

The agencies also proposed rules that would provide that one month is the maximum allowed length of any reasonable and bona fide employment-based orientation period.         

The 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.”         

The 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.         

Under the 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.         

For 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 June 2.         

If there 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.         

The proposed rules were also published in the Feb. 24 Federal Register (79 Fed. Reg. 10,320, 2/24/14).         

Comments on the proposed rules must be received by April 25.

Excerpted from a story that ran in Pension & Benefits Daily (2/20/2014).