Final regulations released on 90-day waiting periods and its limitations
Update to previous alert from July 26, 2013: Federal agencies release proposed rule on 90-day waiting period limitation
May 21, 2014
On Feb. 20, the Department of Labor (DOL), Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) jointly released both the final rule and proposed rule on 90-day waiting periods.
The final rule on waiting periods applies to plan years beginning on or after Jan. 1, 2015. For the 2014 plan year, compliance is based on the proposed rule from 2013, which states that group health plans (including grandfathered, non-grandfathered and self-funded plans) and group health insurance coverage issuers cannot apply a waiting period that exceeds 90 days.
The final rule maintains that eligibility conditions that are not based solely on the passage of time are generally acceptable unless designed to avoid compliance with the 90-day waiting period limitation.
- If a group health plan conditions eligibility for health care on an employee regularly working a specified number of hours per period (or working full time), and it cannot be determined that a newly hired employee is reasonably expected to meet the required number of hours (or work full time), the health plan may take a reasonable period of time to determine whether the employee meets the plan’s eligibility conditions. A time period designed to determine whether such an employee meets the plan’s eligibility conditions is considered compliant with the 90-day waiting period limitation if coverage is made effective no later than 13 months from the employee’s start date plus, if the employee’s start date is not the first day of a calendar month, the time remaining until the first day of the next calendar month.
Health insurance issuers may rely on the eligibility information reported by employers (or other plan sponsors) and will not be considered in violation of the 90-day waiting period limitation if:
- Issuers require plan sponsors to make a representation regarding the terms of any eligibility conditions or waiting periods imposed by plan sponsors before an individual is eligible to become covered under the terms of the plan (and requires plan sponsors to update this representation with any applicable changes); and
- Issuers have no specific knowledge of the imposition of a waiting period that would exceed the permitted 90-day period.
All calendar days are counted beginning on the eligibility date, including weekends and holidays. Employee coverage must begin on or before the 91st day of eligibility.
Proposed rule on waiting periods and orientation periods
The proposed rule on orientation periods may be relied on for the 2014 plan year.
The proposed rule, issued in conjunction with the final 90-day waiting period rule, allows for a “reasonable and bona fide” employment-based orientation period of no more than one month.
During this time the employer and employee can evaluate whether the employment situation is satisfactory, and standard orientation and training processes begin.
The Proposed Rule may be relied on throughout 2014 and if a final rule is more restrictive, reasonable time for compliance will be provided.
More information can be found at:
The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.