Co-authored by Christopher K. Buch.
On March 18, the Departments of Health and Human Services, Labor and Treasury (the Departments) issued joint proposed regulations on the Patient Protection and Affordable Care Act’s prohibition of waiting periods of longer than 90 days for group health plans.
For plan years beginning on or after January 1, 2014, the proposed regulations provide that group health plans and insurers are prohibited from applying a waiting period of longer than 90 calendar days for employees and their dependents who are otherwise eligible to participate in a plan. The proposed regulations were issued as a follow-up to Department of Labor Technical Releases 2012-01 and 2012-02, which define a waiting period as the period of time that must pass before coverage for an employee or dependent who is otherwise eligible for coverage under the plan terms can become effective.
Of special note in the proposed regulations is the Departments’ combined position that there is no de minimis exception equating the 90-day period with a three-month period. The proposed regulations provide that the waiting period is to be based on 90 calendar days, which include weekends and holidays. Therefore, plans that impose a three-month waiting period will need to be amended prior to the start of the 2014 plan year.
In addition, the proposed regulations make it clear that imposing a 90-day waiting period where coverage begins on the first day of the month following the expiration of such waiting period is no longer permissible, as the total waiting time for employees and dependents would exceed 90 calendar days. Plans containing such provisions would need to be amended prior to the start of the 2014 plan year. To avoid potential mid-month plan entry dates for employees and their dependents, a plan may wish to impose a shorter waiting period (such as 60 days), and allow entry on the first day of the calendar month following such shorter waiting period (provided that the total wait time does not exceed 90 calendar days).
While a plan will need to make coverage available to employees and their dependents within 90 days, the proposed regulations do not penalize plans if an employee or dependent delays the election to participate in the plan beyond such 90-day period.
Finally, group health plans and insurers are still able to condition eligibility on factors other than the passage of time (such as whether an employee meets specific sales goals or reaches specified commission levels) if the condition is not imposed to circumvent the 90-day rule. The proposed regulations also have outlined special rules that apply to variable-hour employees when a specified number of hours of service per period is a plan eligibility condition.
A copy of the proposed regulations can be found here.
A copy of DOL Technical Release 2012-01 can be found here.
A copy of DOL Technical Release 2012-02 can be found here.