The Final Regulations Clarify The Application Of Orientation Periods To The Affordable Care Act's 90-Day Waiting Period Rule


Earlier this year, proposed regulations pertaining to the 90-day waiting period provision of the Affordable Care Act (ACA) introduced the concept that employers may require new employees to complete a one-month “orientation period” before the eligibility waiting period begins for the employer's group health plan. The orientation period is meant to allow an employer and employee time to evaluate whether the employment situation is satisfactory for each party. Recently issued final regulations adopt - without substantive changes - the orientation period provisions in the proposed regulations but also clarify the interplay between the waiting period and orientation period rules and the Employer Shared Responsibility Mandate (Employer Mandate). An orientation period is one month in length and is determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date. However, large employers utilizing an orientation period should understand that these final regulations are different from the requirements under the “Employer Mandate.” Large employers may be subject to penalties under the Employer Mandate if they delay offering coverage to newly-hired full-time employees beyond the first day of the fourth month following the full-time employee’s hire date. Generally, a one month orientation period, followed by a 90-day waiting period will be longer than the Employer Mandate’s “first day of the fourth month” rule. It is, therefore, recommended that if a large employer utilizes an orientation period prior to beginning the group health plan’s waiting period, that coverage be offered no later than the first of the month after 60 days following the end of the orientation period in order to be consistent with the Employer Mandate rules.

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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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