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Waiting Periods

For plan years beginning on or after January 1, 2014, the Affordable Care Act prohibits all group health plans from imposing waiting periods in excess of 90 days. This prohibition applies to fully-insured and self-insured plans, as well as to grandfathered and non-grandfathered plans.

A waiting period is a period of time that must pass before coverage becomes effective for an individual who is otherwise eligible to enroll under the terms of a group health plan.Plans may use eligibility conditions that are based on a lapse of time so long as they are not longer than 90 days. Eligibility conditions that are not based on a lapse of time are permissible so long as they are not designed to avoid compliance with the 90-day waiting period limitation. The following are examples of eligibility conditions that are considered to be designed to comply with the 90-day waiting period rules.

Substantive Eligibility Conditions

Plans may impose substantive eligibility conditions without violating the 90-day waiting period limitation. Examples of substantive eligibility conditions include being in an eligible job classification or satisfying job-related licensure requirements or certification.

Cumulative Hours-of-Service Requirement

A cumulative hours-of-service requirement will not be considered to be designed to avoid compliance with the 90-day period limitation if it does not exceed 1,200 hours. However, a cumulative hours-of-service requirement can be applied to an individual only once.

New Part-time, Variable Hour and Seasonal Employees

Under the final Employer Mandate regulations, employers may use an Initial Measurement Period (IMP) to determine the full-time status of new part-time, variable hour and seasonal employees whose average hours cannot reasonably be determined on their start date. The IMP may be between three to 12 months and begins on the newly hired employee’s start date or the first day of the calendar month following the start date.

For purposes of the 90-day waiting period rules, this period may be used to determine if the employee meets the plan’s eligibility requirements and will be considered to be in compliance with the 90-day waiting period rules if coverage is effective no later than 13 months from the employee’s start date.

Reasonable and Bona Fide Orientation Period

An employer may condition eligibility on an employee’s completion of a “reasonable and bona fide employment-based orientation period.” An orientation period will comply with the 90-day waiting period rules if: (1) the orientation period does not exceed one month, and (2) the waiting period begins on the first day after the orientation period ends.