Health Care Reform's 90-Day Waiting Period Guidance for Group Health Plans Deserves a Closer Look

by BakerHostetler

One of the many requirements bearing down on group health plans in 2014 is the 90-day waiting period rule found in section 2708 of the Public Health Service Act (PHS Act), as added by the Affordable Care Act (ACA). Because of the way the statute has been interpreted by recently proposed regulations, sponsors of group health plans, should not assume that an existing waiting period satisfies the regulations just because it is not more than 90 days long. Various factors such as how eligibility requirements are applied, when that 90-day period begins and how it is measured will determine compliance with the proposed regulation. Further, the 90-day waiting period requirement is impacted by the related proposed regulations that dictate how a group health plan sponsor identifies its full-time employees under what is known as the "employer- shared responsibility" provisions of the ACA.

PHS Act section 2708, which applies to grandfathered and non-grandfathered group health plans as well as group health insurance issuers, requires that coverage for an otherwise eligible employee (or dependent) must be effective no later than 90 days after the employee satisfies the plan's eligibility conditions, such as being hired into a particular classification or group of employees or completing a required minimum number of hours worked. Regardless of whether the employee takes more than 90 days to actually elect coverage, the plan will be in compliance if the employee is offered coverage in such a manner as to cause coverage to be effective no later than the end of the 90-day waiting period.

Eligibility Conditions Not Based Solely on Lapse of Time

Other eligibility conditions (i.e., those not based solely on the lapse of time) will generally be allowed unless the condition is designed to avoid compliance with the 90-day waiting period rule. The proposed regulations provide guidance to help employers or plan sponsors ensure that their group health plan's eligibility requirements are not considered, in the eyes of the Departments of Treasury, Labor and Health and Human Services, a mechanism for avoiding compliance. The following are some considerations for group health plans that have cumulative service eligibility requirements or may cover variable-hour employees:

  • If a plan's eligibility conditions are based solely on completing a number of cumulative hours of service, the requirement cannot exceed 1,200 hours of service.
  • If a plan has a cumulative hours of service requirement, the waiting period must begin not later than when the new employee satisfies the eligibility requirement. Once an employee meets the cumulative hours of service requirement, the plan cannot require an employee to meet the cumulative hours of service requirement in subsequent years.
  • If a plan has variable-hour employees, the plan may use a measurement period to determine whether a variable-hour employee meets the eligibility requirements. A variable-hour employee is an employee for whom, as of the employee's first day of work with the employer (the employee's "start date"), the plan sponsor cannot determine whether the employee will work full-time or meet the service hour requirement. For this purpose, the measurement period must begin on any date between the employee's start date and the first day of the first calendar month following the employee's start date, and the measurement period may not exceed 12 months.
  • If a plan combines a measurement period with a waiting period, compliance with the 90-day waiting period rule will be presumed as long as coverage is effective for an employee within the first 13 months, as measured from the employee's start date.

Failure to comply with the 90-day waiting period rules may result in various penalties, including a penalty for each day of the failure as to each individual to whom the failure relates. Possible penalties may be imposed by one or more of the government agencies involved and thus defy concise summarization.

While a substantive eligibility condition that determines when coverage is available to employees may be permissible under these proposed waiting period regulations, and therefore not trigger the particular waiting period penalties, such a substantive eligibility condition could still result in a violation of the ACA's employer-shared responsibility requirements. For example, an "applicable large employer" (an employer with 50 or more full-time equivalent employees) may not impose a substantive eligibility condition requiring its employees to work more than 30 hours per week to be eligible for group health plan coverage and escape potential liability under the employer-shared responsibility provisions, also known as the "employer mandate." Further information on the employer mandate can be found in our recentĀ Benefits Broadcast Article "Start Counting! Employers and Group Health Plans Must 'Count' Themselves into Compliance with the Affordable Care Act in 2013 and 2014."

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.

© BakerHostetler | Attorney Advertising

Written by:


BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.