New Guidance Released on Insurance Waiting Periods

The Internal Revenue Service, U.S. Department of Labor, and Department of Health and Human Services have jointly released proposed regulations regarding the provision of the Patient Protection and Affordable Care Act (PPACA) that prohibits waiting periods for group health insurance coverage greater than 90 days. The regulations impact plans as of January 1, 2014. After that date, newly hired, eligible employees must be offered coverage no later than 90 days after they begin work.  

The regulations permit other conditions not solely based on the lapse of a time period to be used, such as cumulative hours worked or a certain level of commissions earned. However, these requirements cannot be imposed to avoid the 90-day requirement, and any hours-worked requirement cannot exceed 1,200 hours. To determine whether a newly hired employee will work the requisite number of hours required to become eligible, the policy may take a reasonable time to determine whether the employee meets the plan’s eligibility requirements. A plan may use a measurement period consistent with that used for PPACA’s employer-shared responsibility to make this determination.

If an employee may elect coverage that would begin on a date that does not exceed the 90-day limitation but chooses not to, the condition is satisfied and the employer will not be in violation of the regulations. MSEC is available to help members with their questions regarding compliance and implementation of PPACA.