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PPACA Waiting Period Rules: 90 Days Means 90 Days

HHS, DOL, and IRS recently proposed regulations interpreting the health care reform mandate limiting health plan waiting periods to no more than 90 days. The guidance is fairly straightforward, but does not include one clarification we were anticipating: 3 months cannot be used as a substitute for 90 days. 90 days means 90 days. Period.

What is a waiting period? Under the rules, a waiting period is any period of time that must pass before coverage may become effective for anyone who has otherwise satisfied the plan's eligibility criteria. Eligibility criteria that are based solely on the lapse of a time period count as part of the waiting period. So, for example, if a plan requires employees to work in a particular job classification to be eligible for coverage, time spent working in an ineligible job classification does not count as a waiting period, and the 90-day period may be imposed once an employee moves to an eligible job classification. But if a plan merely requires 60 days of full-time employment to become eligible, those 60 days of employment count toward the waiting period, so another 90 days may not be imposed.

Variable-hour employees. We know from the regulations on the look-back measurement method (see coverage here) that we may need some time (up to 12 months or so) to determine whether a variable-hour employee meets an eligibility requirement relating to average hours worked. These proposed regulations clarify that the period during which a variable-hour employee's hours of service are being measured is not treated as violating the 90-day limitation, so long as coverage becomes effective for an eligible employee no later than 13 months plus a fraction of a month after the date the employee is hired.

Counting days. The biggest question answered by these rules is how days will be counted for purposes of applying the 90-day limit. There was some expectation that the 90-day limitation would be treated as satisfied if coverage became effective within 3 months, and even perhaps if coverage became effective on the first day of the month following 90 days or 3 months of employment. But the rules do not provide that degree of flexibility. For purposes of applying the 90-day limit, all calendar days (including weekends and holidays) are counted, and coverage must become effective no later than the 91st day. So, for example, if a plan wants to have coverage become effective as of the first day of a month, it may effectively only be able to impose a waiting period of 60 days, to ensure that coverage always becomes effective not later than the 91st day.

Note that these day-counting rules put the 90-day waiting period requirement slightly at odds with the play-or-pay guidance, which provides that a newly hired full-time employee must be offered coverage within 3 full calendar months to avoid penalty exposure. Compliance with the 90-day restriction will prohibit delaying the effective date of coverage for the full 3-month period that would be permitted under the play-or-pay guidance.


Don Berner Image
Don Berner, the Labor Law, OSHA, & Immigration Law Guy
Boyd Byers Image
Boyd Byers, the General Employment Law Guy
Jason Lacey Image
Jason Lacey, the Employee Benefits Guy
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