The IRS recently issued final regulations interpreting the Affordable Care Act (ACA) provision that prohibits group health plans from having an eligibility waiting period of more than 90 days. A waiting period is defined as the period of time that must pass before an otherwise eligible individual’s coverage under the employer’s group health plan becomes effective. This means that an eligible employee’s coverage under the plan must be effective no later than the 91st day (including weekends and holidays) following the start of employment. Under these final rules, a plan may still impose substantive eligibility rules, unrelated to the passage of time—for example, a requirement that the employee must be employed in a covered job classification, complete a probationary period of employment, or obtain a required license, unless those other conditions of eligibility are designed to be an end-run around the 90-day restriction.
In the case of variable-hour employees, for whom the employer plans to use a “measurement period” to determine whether they are full-time employees who are eligible for coverage, the 90-day restriction still applies, but in no case may coverage become effective later than 13 months after the employee’s start of employment. The ACA permits employers to use a “measurement period” of between 3 and 12 months, but in order to comply with this waiting period rule, if the employer plans to impose a waiting period, then it must select a measurement short enough to ensure that an otherwise eligible employee’s coverage becomes effective no later than 13 months after the start of employment.
A plan may impose a cumulative hours-of-service requirement for eligibility as long as the requirement doesn’t exceed 1,200 hours. If an employee is terminated and later rehired, the employer may treat the employee as a new hire for purposes of this rule as long as the termination and rehire were not done to avoid compliance with the 90-day waiting period restriction. This ACA provision applies to both grandfathered and non-grandfathered employer-sponsored group health plans for plan years beginning on or after January 1, 2014 (79 Fed Reg 10296, Feb. 24, 2014). If you have questions about your plan’s eligibility waiting period, contact Kristine Bingman at Vigilant.
The IRS recently issued final regulations interpreting the Affordable Care Act (ACA) provision that prohibits group health plans from having an eligibility waiting period of more than 90 days. A waiting period is defined as the period of time that must pass before an otherwise eligible individual’s coverage under the employer’s group health plan becomes effective. This means that an eligible employee’s coverage under the plan must be effective no later than the 91st day (including weekends and holidays) following the start of employment. Under these final rules, a plan may still impose substantive eligibility rules, unrelated to the passage of time—for example, a requirement that the employee must be employed in a covered job classification, complete a probationary period of employment, or obtain a required license, unless those other conditions of eligibility are designed to be an end-run around the 90-day restriction.
