Final Regulations Issued on 90-Day Waiting Period Limitation

On February 24, 2014 the government finalized the rule requiring employers to limit group health plan waiting periods for new employees who are otherwise eligible to enroll in the plan.

Waiting periods that are based solely on the lapse of a time period must not be longer than 90 calendar days.  The rule is effective for plan years beginning in 2014.

Orientation Period

An important change, however, allows employers to require  completion of a “reasonable and bona fide orientation period” by new employees before the 90-day waiting period begins.  The government is proposing that the orientation period be no longer than one month.

Other Allowances

The final regulations reaffirm that employers may condition eligibility to enroll in the group health plan on whether the new employee is in an eligible job classification or on the requirement of the employee to achieve job-related licensure.  In these instances, the employee’s waiting period would begin on the day after such a condition is met.

Some employers require a new employee to complete a certain number of hours of service before being eligible to participate in the group health plan.  This is permissible as long as the hours-of-service requirement does not exceed 1,200 hours.

The key takeaway is that allowances such as these are permitted only if they are not designed to avoid compliance with the 90-day waiting period limitation.

Multiemployer Plans

The final regulations recognize that multiemployer plans often base eligibility for health coverage on unique operating structures, such as using complex formulas for earnings and residuals or the use of “hours banks.”  Once again, these methods of determining eligibility are permitted as long as they are not designed to avoid compliance with the 90-day waiting period limitation.