California Aligns Health Insurance Waiting Periods With Affordable Care Act

Author: Gloria Ju

August 26, 2014

New California legislation, SB 1034, aligns state health insurance waiting periods with the federal Affordable Care Act's (ACA's) maximum 90-day waiting period. The state had previously established a 60-day cap.

The bill prohibits a small employer health care service plan contract from imposing a waiting or affiliation period or a preexisting condition provision upon any individual. For plan years beginning in 2014 or 2015, a small employer is defined as having 1-50 employees on at least 50 percent of working days during the preceding calendar quarter or year. For plan years beginning on or after January 1, 2016, a small employer is defined as having 1-100 employees on at least 50 percent of working days during the preceding calendar quarter or year.

The bill also requires small employers with grandfathered health care service plan contracts and health insurance policies to send a written notice to an eligible employee or dependent who fails to enroll during an open enrollment period that he or she may be excluded from eligibility for coverage until the next open enrollment period. Previously, the notice informed employees and dependents that they may be excluded for a specified period of time.

Signed by California Gov. Jerry Brown on August 15, SB 1034 applies to plan years beginning on or after January 1, 2015.

Under the ACA, a 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. An individual is "otherwise eligible" if he or she has met the plan's substantive eligibility conditions, which may include being in an eligible job classification, achieving a job-related licensure or satisfying a reasonable and bona fide orientation period (cannot be more than one month long).