Federal agencies release proposed rule on 90-day waiting period limitation
April 30, 2013
On March 18, the Department of Labor, Internal Revenue Services, and the Department of Health and Human Services jointly released a proposed rule on the 90-day waiting period limitation.
The proposed rule largely follows guidance that was jointly released by DOL/IRS/HHS in August 2012.
The proposed rule reaffirms that for plan years beginning on or after January 1, 2014, a group health plan (including grandfathered, non-grandfathered, and self-funded plans) may not impose a waiting period exceeding 90 days that is solely based on the lapse of time.
The proposed rule also provides guidance on applying the waiting period limitation to employers that condition eligibility based on the number of hours an employee works. If the employer cannot reasonably determine whether the employee is expected to meet the work hour requirement, the employer can use a measurement period to determine if the employee is eligible under the plan terms. The measurement period cannot be more than 13 months, and can begin on any date between the employee’s start date and the first day of the next calendar month.
Under the proposed rule, a group plan may require employees to complete a certain amount of service before qualifying for benefits. Cumulative hours of service requirements are acceptable as long as the service hour requirements do not exceed 1,200 hours.
The proposed rule clarifies that the 90-day waiting period limitation does not apply to employer provisions that base eligibility on unique circumstances such as meeting certain sales goals or earning a certain level of commission.
In the case of insured group coverage, the issuer can rely on the eligibility information provided by the employer. The issuer will not be deemed noncompliant where the employer supplies the issuer with the terms of its eligibility conditions and the issuer has no specific knowledge of a waiting period that would exceed the permitted 90 days.
If the 91st day of the waiting period is a weekend or holiday, coverage must be offered prior to this date.
If an individual is in a waiting period for coverage under a calendar year group health plan prior to the January 1, 2014 effective date, and after that effective date, their waiting period would exceed 90 days, the waiting period would no longer apply.
Where can I find more information?
More information can be found in the proposed rule.
The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. 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. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.