Administering the ACA’s Waiting Period Limit
Under the Patient Protection and Affordable Care Act (ACA), a health insurer or group health plan may not apply any waiting period that exceeds 90 calendar days after the individual employee first becomes eligible to enroll by meeting the eligibility conditions of the plan.
The Internal Revenue Service and U.S. Departments of Labor and Health and Human Services issued proposed regulations on Mar. 18, 2013, regarding the waiting period limit. The proposed regulations will remain in effect at least through the end of 2014. Employers that follow the proposed regulations will be deemed compliant through the end of 2014.
Plan sponsors must comply with the 90-day rule for plan years beginning on or after Jan. 1, 2014.
Medica guidance to employers
Medica will continue to rely on the employer to determine eligibility and effective dates; however, Medica will not administer any effective date of greater than 90 calendar days. We ask all of our group customers to review their current waiting period and eligibility conditions as soon as possible to determine if any changes need to be made to comply with the ACA requirements. Please see your agent, broker or Medica account manager if you have any questions about the information below or need assistance.
All calendar days must be included when counting to 90 days after an employee has satisfied the eligibility conditions. It is not permissible to delay coverage until the first day of the month following the completion of the 90-day waiting period. Employers that wish to use a first day of the month or first day of the pay period enrollment date will need to apply shorter waiting periods in order to ensure that coverage would become effective before the 90-day waiting period limit is reached.
While the waiting period must not exceed 90 calendar days, it may be shorter than 90 calendar days. Therefore, if the 91st day falls on a weekend or holiday, the employer may make coverage effective before the 91st day. If the employer starts coverage at the beginning, middle or end of the month or by pay periods for administrative simplicity, the coverage may begin before the 91st day.
Waiting periods in effect on Jan. 1, 2014
If an employee is in a waiting period when the ACA waiting period requirement goes into effect on Jan. 1, 2014, the total waiting period cannot extend beyond 90 calendar days. For example, if the employer had a six-month waiting period and a full-time employee was hired on Oct. 1, 2014, the employee’s coverage must begin no later than Jan. 1, 2014. This is 93 days after the waiting period began but is effective as of the applicability date of the ACA requirement.
A note about eligibility conditions
While the ACA does not impose specific eligibility requirements, beginning in 2015 it does impose a penalty for employers with 50 or more full-time employees that do not offer coverage to all full-time employees and their dependents. Therefore, full-time status will become a condition of eligibility beginning in 2015. At that time, coverage must be offered to all full-time employees no later than 90 calendar days after the employee’s full-time status began, per the rules described above. The ACA defines a full-time employee as one who works an average of 30 hours or more per week.
The ACA permits group health plans to impose eligibility conditions based on other factors, such as achieving a license or other qualification required to perform the job, as long as these eligibility conditions are not designed to avoid compliance with the 90-day waiting period limit. Group health plans also may use cumulative hours of service as an eligibility condition, as long as the eligibility threshold is no more than 1,200 hours.
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