ACA Final Rule Limiting Waiting Periods Released

Author: Tracy Morley, XpertHR Legal Editor

February 25, 2014

The US Departments of Labor, Treasury and Health and Human Services ("Departments") released a final rule implementing the 90-day waiting period limitation under the Affordable Care Act (ACA). The final regulations are substantively the same as the proposed regulations, and do not require that coverage be offered to any particular individual or class of individuals, but do prohibit group health plans from imposing a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage.

Under the final rule:

  • The waiting period is defined as the period of time that must pass before coverage for an individual who is otherwise eligible to enroll under the terms of the group health plan can become effective.
  • Being otherwise eligible to enroll in a plan means having met the plan's substantive eligibility conditions, such as being in an eligible job classification, achieving job-related licensure requirements specified in the plan's terms, or satisfying a reasonable and bona-fide employment-based orientation period.
  • Other conditions to determine eligibility, such as meeting certain goals, earning a certain level of commission or successfully completing an orientation period are generally permissible.
  • Eligibility based on cumulative hours of services is generally allowed as long as the requirement is capped at 1,200 hours.
  • A former employee who is rehired may be treated as newly eligible for coverage upon rehire, and may be required to meet the plan's eligibility criteria and satisfy the plan's waiting period, as long as the termination and rehire are not designed to avoid compliance with the 90-day waiting period.

The 90-day limitation on waiting periods applies to all plan types (with the exception of HIPAA excepted benefits), including grandfathered and self-insured plans beginning in 2014. The final rule applies to plan years beginning on or after January 1, 2015. Plans beginning prior to that time may comply with either the final rule or the proposed rules.

The final rule does not specify the facts and circumstances under which an employment-based orientation period would not be considered "reasonable and bona-fide." Accordingly, the Departments issued a companion proposed rule that would limit the maximum duration of an otherwise permissible orientation period to one month. This period may be used for training and orientation and to determine whether the employment situation was satisfactory for each party. The one-month period would be calculated by adding one calendar month to, and subtracting one calendar day from, the employee's start date in a position that is otherwise eligible for coverage.