Benefits Buzz

ACA 90 Day Waiting Periods

Posted on January 22nd, 2014

An employer can be fined up to $100 per day for every employee that had a waiting period in excess of 90 calendar days.

The Affordable Care Act (ACA) imposes a new rule that group health plans cannot have a waiting period of more than 90 calendar days. In other words, employees must receive an effective date on the group health plan within 90 calendar days from the date they are hired or within 90 calendar days from the date they become newly eligible for coverage for circumstances such as an increase in the number of hours they normally work. On the surface this seems like a rather easy rule to understand, but there are some technicalities that employers need to know. 

The 90 day waiting period applies to both grandfathered and non-grandfathered group health plans, and it must be implemented for the first plan year that begins on or after January 1, 2015.* It should be emphasized that the waiting period cannot exceed 90 calendar days. It’s not 90 business days or the first day of the month after 90 days of employment.

This new waiting period only applies to group health plans. That means it would apply to the major medical coverage and any integrated HRA offered by the employer, but the waiting period won’t apply to most other benefits offered by the employer. The employer can impose longer waiting periods for dental, vision, life and disability coverage. The employer can also impose longer waiting periods for Health FSAs that meet the definition of an excepted benefit or HRAs that only reimburse dental/vision expenses. The employer can even have a longer waiting period before they make any contributions to a HSA. 

Although employers can have longer waiting periods for non-group health plans, it may not be a practical solution for them. It can be an administrative challenge to have different waiting periods for different benefits. As a result, the 90 day waiting period that applies to group health plans may indirectly impact the waiting periods of non-group health plans. 

Employers that impose waiting periods of more than 90 calendar days for any group health plan are subject to financial penalties if it is discovered by the Department of Labor (DOL) or other regulatory agencies. The ACA rules state that an employer can be fined up to $100 per day for every employee that had a waiting period in excess of 90 calendar days.

Click here to view the final rule issued by the U.S. Departments of Health and Human Sevices, Labor and the Treasury released on Feb. 20, 2014.

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*Updated: March 3, 2014. 

 

Note: The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.

 

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