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90-day Limit on Waiting Periods

Smart first steps


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The Issue

Group health plans will not be permitted to apply any waiting periods that exceed 90 days. A “waiting period” generally refers to the period that must pass before an otherwise eligible employee or dependent can have coverage under a group health plan become effective.

What is a “Waiting Period”?

The definition of “waiting period” for purposes of the 90-day limit is the same as the current “waiting period” definition used for the HIPAA preexisting condition exclusion restrictions codified at section 2704(b)(4) of the Public Health Service Act. The following example from the relevant regulations illustrates this definition:

Example:

(i) Facts. A group health plan limits eligibility for coverage to full-time employees of Employer Y. Coverage becomes effective on the first day of the month following the date the employee becomes eligible. Employee C begins working full-time for Employer Y on April 11. Prior to this date, C worked part-time for Y. C enrolls in the plan and coverage is effective May 1.

(ii) Conclusion. C’s enrollment date is April 11 and the period from April 11 through April 30 is a waiting period. The period while C was working part-time, and therefore not in an eligible class of employees, is not part of the waiting period.

This example makes clear that a “waiting period” does not include any period when an individual is not eligible for coverage due to his or her employment status.

More guidance is needed on other questions, such as whether coverage must begin immediately after 90 days or if it can be delayed until the first day of the month beginning after the 90-day waiting period ends.

Effective Date: Plan years beginning on and after January 1, 2014. Applies to grandfathered health plans.

Key Implication: Plan Design

Plans currently requiring waiting periods of more than 90 days will need to be modified to comply with the 90-day maximum.

Key Implication: Plan Administration

Waiting periods help plans avoid some of the administrative burdens associated with covering employees and dependents for very short periods of time.

Smart First Steps for Employers to Consider

Plan Design: Review current waiting periods to determine if changes will be needed to comply. Even though the requirement does not become effective until 2014, an advantage to an early assessment is to have time to determine what, if any, impact a shorter waiting period (if needed) will have and develop possible alternative solutions.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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