Recent proposed regulations explain implementation of the 90-day waiting period limitation included in the Affordable Care Act for employer-sponsored group health plans, beginning January 1, 2014. Under the Affordable Care Act, a group health plan or health insurance issuer offering group health insurance coverage cannot apply any waiting period that exceeds 90 calendar days (including weekends and holidays). Under the proposed regulations, and consistent with earlier HIPAA regulations, a "waiting period" is 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. Being "otherwise eligible to enroll" in a plan means having met the plan's substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the plan's terms). These rules apply to both grandfathered and non-grandfathered fully-insured and self-funded group health plans. Failure to comply with these rules will subject a non-governmental group health plan to a penalty of $100 per day per individual to whom the failure relates.
Under the proposed regulations, eligibility conditions based solely on the lapse of a time period are permissible for no more than 90 calendar days. Other conditions for eligibility are generally permissible, as long as the condition is not designed to avoid compliance with the waiting period limitation. For example, a plan provision that bases eligibility on whether an employee is meeting certain sales goals or earning a certain level of commission would generally be considered an acceptable substantive eligibility provision. In addition, a group health plan may condition eligibility on an employee's having completed a number of cumulative hours of service without causing a violation of the limitation, so long as the service requirement does not exceed 1,200 hours, and the 90-day waiting period begins as soon as the employee satisfies the service requirement. Keep in mind, however, that while a cumulative hours of service eligibility requirement of up to 1,200 hours may be permissible under the 90-day waiting period rules, it may give rise to a penalty under the "pay or play" regulations, so employers will need to carefully consider both regulations if they wish to use an hours of service eligibility requirement.
In any event, under these proposed regulations, if, under the terms of the plan, an employee is able to elect coverage that becomes effective on a date that does not exceed the 90-day waiting period limitation, the coverage will comply with the waiting period rules, even if an individual is late in completing or submitting the required forms and thus actually elects coverage beyond the end of the 90-day waiting period. Note that the waiting period limitation provision does not require an employer to offer coverage to any particular employee or class of employees; it merely prevents an otherwise eligible employee (or dependent) from being required to wait more than 90 days before coverage becomes effective.
One final, important note about these proposed regulations is that they announce that certificates of creditable coverage will be phased out by 2015. Because the Affordable Care Act's prohibition on exclusions from coverage due to pre-existing conditions will apply to all individuals effective with plan or policy years beginning on or after January 1, 2014, plans will no longer be required to issue certificates of creditable coverage to avoid any preexisting condition exclusions beginning as of December 31, 2014.
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