For plan years beginning on or after Jan. 1, 2014, health care reform provides that employer group health plans cannot apply any waiting period (for employee coverage) that exceeds 90 days. Under the law, a “waiting period” is defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.
In 2013, the IRS, EBSA and HHS issued proposed regulations and FAQs that set forth the parameters for complying with the 90-day waiting period. See the March 26, 2013, edition of Compliance Corner for a full summary of the proposed regulations.
On Feb. 20, 2014, the departments finalized the waiting period regulations, which generally retain the guidance from the previously issued proposed regulations. However, clarification was provided on several points, including:
- Modifications related to the satisfaction of a reasonable and bona fide employment-based orientation period
- Application of the 90-day limitation period to former employees
- The treatment of multiemployer plans
- The extent to which a health insurer may rely on eligibility information provided by an employer
- The applicable effective date and reliance periods related to the guidance on the 90-day waiting period
The waiting period rules do not prohibit an employer from having substantive eligibility provisions under the plan. For example, the proposed regulations allowed an employer to base eligibility on inclusion in an eligible job classification or achieving job-related licensure requirements specified in the plan’s terms, prior to beginning a waiting period.
The final regulations add a third example that allows an employer to require a new employee to successfully complete a “reasonable and bona fide employment-based orientation period” before beginning a waiting period for a group health plan. The final regulations do not specify the circumstances under which the duration of an orientation period would not be considered “reasonable or bona fide.” However, proposed regulations (described in more detail in the next article) propose one month as the maximum length of any orientation period.
Clarification was also provided with respect to rehires. The final regulations provide that a former employee who is rehired may be treated as newly eligible for coverage upon rehire and, therefore, a plan may require that individual to meet the plan’s eligibility criteria and to satisfy the plan’s waiting period anew. However, the termination and rehire cannot be a subterfuge to avoid compliance with the 90-day waiting period limitation.
In other changes, the final regulations permanently remove the requirement to provide Evidence of Creditable Coverage for all plans, regardless of plan year, effective Dec. 31, 2014. Plans must continue to provide HIPAA Certificates of Creditable Coverage until this time.
The prohibition on excessive waiting periods is effective for plan years beginning on or after Jan. 1, 2014. For the HIPAA Creditable Coverage provisions, the final regulations apply effective Dec. 31, 2014. All other technical amendments apply for the first plan year beginning on or after April 25, 2014.