90 Day Waiting Period Guidelines Issued

Last week (02/20/2014), the ACA’s “trinity” of compliance and enforcement (i.e., departments of Health/Human Services; Labor; Treasury) jointly issued both FINAL and PROPOSED regulations pertaining to the ACA provision addressing new hire waiting period limitations.  This week’s post will focus primarily on the FINAL regulations.

Let me start by defining what it is that we received guidance on – the so called “90 day waiting period limitation”.  For readers not familiar with this issue…the waiting period is the period of time allowed to pass before health insurance coverage can become effective for an otherwise eligible employee (and his/her dependents).  Per the Affordable Care Act (ACA), this period of time is now restricted, and can be NO LONGER than 90 days.  Thus, the latest possible time that coverage can take effect is the 91st day from the initial date of hire.  This affects any employer that has a waiting period that is:

  1. first of the month following 90 days of employment; and
  2. any period of time greater than 90 days.

IMPORTANT: This provision applies to ALL group health plans renewing on or after January 1, 2014, regardless of grandfather status, size of group, or funding arrangement (i.e., fully or self insured).

There are only two (2) differences between the final regulations issued last week, and the proposed regulations released last August:

  1. An allowance for a “reasonable and bona fide employment-related orientation period”; and
  2. Clarification that employees terminated and subsequently rehired are treated as a “new hire” for purposes of applying the waiting period.  The same applies to an employee who moves from a non-eligible class to an eligible class.

The final regulations also provided the following particulars:

·         Calendar days are counted in determining the 90-day period, including weekends and holidays. Plans may choose to permit coverage earlier than the 91st day for easier administration around events such as weekends, holidays or payroll periods. However, a requirement that coverage will become effective the first day of the following month or payroll period would not be permitted if the waiting period is 90 days.
·         The time in which eligible employees take to elect coverage is not counted as part of that 90-day limit.

·         If a person enrolls as a late or special enrollee, any time period before the enrollment date is not counted as part of the 90-day limit.

The final regulations also addressed the issuance of Health Insurance Portability and Accountability (HIPAA) “certificates of creditable coverage”, more commonly referred to in industry parlance as “HIPAA certs”.  In light of the ACA’s ban on preexisting condition limitations, HIPAA certs will no longer be necessary.  However, since the ban takes effect on each employer plan’s PLAN YEAR, rather than a specific, fixed date in time, HIPAA certs continue to be required until 12/31/2014.

To access a copy of the 85 pages of final regulations, click here – http://www.cignaproducer.com/pdf/90_Day_Waiting_Period_Final_Reg_02-20-14.pdf