Health Care Reform Update: Proposed Rules Issued On 90-Day Limit Placed On Waiting Periods For Health Coverage


Beginning in 2014, the Affordable Care Act of 2010 (the "Act") will prohibit group health plans and group health insurers from imposing waiting periods greater than 90 days of employment.

On March 21, the Internal Revenue Service (IRS), Department of Labor (DOL), and Health and Human Services (HHS) jointly issued proposed rules (the "Rules") that largely formalized prior guidance issued in 2012. The penalties for non-compliance are significant (up to $100 per day). Therefore, it is important that plan sponsors review the waiting periods and eligibility requirements under their group health plans to ensure that their plans comply with the new 90-day waiting period requirements effective for policy and plan years beginning on or after January 1, 2014.

Most significantly, if the group health plan or insurance policy has a standard coverage effective date beginning the first day of the month following the end of the waiting period, then plans will need to be amended so that the maximum waiting period is less than 90 days. If not amended, circumstances could exist whereby coverage does not begin until the 91st day of employment, which would be longer than the maximum period provided for under the Act.

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What Should You Do?

Employers and sponsors of group health plans should review their practices and health plan documents to ensure that waiting periods beyond 90 days are not imposed on new employees. Particular emphasis needs to be applied to group health plans that delay coverage until the "first day of the month following" the end of the waiting period. Reviewing these provisions will help to ensure that the actual maximum waiting period of 90 days is not exceeded. Additionally, employers with variable-hour employees should review their practices to ensure that they are taking no more than 12 months to determine whether those employees will work a specified number of hours for eligibility purposes.

For More Information

If you would like to download the full text of this Alert, click here. If you have questions about your group health plan and its compliance with any part of the Act, please contact any attorney from the Polsinelli Employee Benefits and Executive Compensation group.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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