Health Policy Brief: 90 Day Waiting Periods

The Departments of Labor, Treasury and HHS have released final regulations governing the Affordable Care Act prohibition on waiting periods that exceed 90 days. This prohibition is in place now and effective for grandfathered and non-grandfathered plans as of January 1, 2014.  It requires that employees that are offered coverage must be offered that coverage on or before the 90th day after hire and not one day more, even if that date falls on a weekend. Employers may comply with either the proposed rule issued last March or the newly issued final rule in regard to plans in place for 2014.

One major difference in the final rule is the introduction of an “orientation period” which is the subject of another set of proposed rules. Comments will be accepted on rules governing orientation periods through April 25, 2014. The proposal would allow employers to require employees to complete a “bona fide” orientation period prior to the beginning of the 90-day waiting period when the employee is being trained or attending orientation sessions, and also for a trial period to determine whether an employee is suitable for a job.  The orientation period may not last more than one month (add a month to the start date and subtract one day). The definition of “bona fide” is likely the subject of future guidance once comments on the proposed rule are received.

It is important to note too that under the proposed and final rules, employers may impose other non-time based requirements, such as being in a particular job classification or achieving licensure. Also, employers may use a measurement period of up to one year to determine whether variable hour employees and seasonal employees are in fact full-time workers under the ACA definition. If an employer uses a measurement period, coverage must be effective in general by the thirteenth month following the start date (although an employer can wait to the first of the month following if the start date is mid-month).  Employers can also impose cumulative hours of service requirements before the 90-day waiting period begins.

The Alliance does not provide legal advice. If you have questions about your plan’s compliance with these requirements or how to implement them, we encourage you to contact your attorney.

Updated March 10, 2014