Final 90-Day Health Plan Waiting Period Rules Issued


On February 24, 2014, the Internal Revenue Service (the “IRS”), Department of Labor and Department of Health and Human Services jointly issued the final regulations implementing the 90-day waiting period limitation under the Affordable Care Act (the “ACA”) and related proposed regulations, clarifying the extent to which an employer may impose an orientation period that is consistent with the 90-day waiting period limitation (see and The final regulations also amend certain HIPAA portability provisions to conform to other provisions of the ACA, including eliminating the requirement for plan sponsors to furnish HIPAA certificates of creditable coverage.

Applicable for plan years beginning on or after January 1, 2015, the final regulations apply to both grandfathered and non-grandfathered plans and generally adopt the provisions of the proposed regulations. For information about the proposed regulations, please see our May 2013 article here.

90-Day Waiting Period Starts Once an Employee or Dependent Becomes Eligible

While a plan need not include a waiting period, to the extent that it does, the waiting period may not exceed 90 days from the date an individual meets the plan’s eligibility criteria. Like the proposed regulations, the final rules define “waiting period” as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll in a plan can become effective. The final rules state that “being otherwise eligible to enroll in a plan” means that the individual has met the plan’s substantive eligibility conditions. The final rules confirm that an eligibility condition is impermissible if it is: (1) based solely on the lapse of time and exceeds 90 days (for example, coverage that commences on the first day of the month after one year of service); or (2) designed to avoid compliance with the 90-day waiting period limitation.

A plan, however, may impose substantive eligibility conditions prior to starting any waiting period, including:

  • An employee’s attainment of an eligible job classification (for example, full-time status);
  • An employee’s attainment of a job-related license;
  • (New) Satisfying a reasonable and bona fide employment-based orientation period; or
  • An employee meeting a cumulative hours of service requirement that does not exceed 1,200 hours for the year.

The final regulations provide or clarify the following:

  • If an individual ceases to be eligible for coverage under a plan and then subsequently becomes eligible, the final regulations clarify that only the individual’s most recent period of eligibility is taken into account to determine whether the individual is a late enrollee.
  • If an individual can elect coverage that becomes effective after a waiting period that does not exceed 90 days, the plan complies with the 90-day limitation even if an individual can take additional time beyond the end of the 90-day waiting period to elect coverage.
  • If a plan conditions eligibility on an employee regularly having a specified number of hours of service per period (or working full-time), and it cannot be determined whether a newly-hired employee is reasonably expected to regularly work that number of hours (or work full-time), then the plan may take a reasonable period of time to determine if the employee meets the plan’s eligibility conditions. Such period may not exceed 12 months and must begin sometime between the employee’s start date and the first day of the following calendar month. If the plan imposes a waiting period, the time period for determining the employee’s eligibility status will comply with the 90-day waiting period limitation if coverage is made effective no later than 13 months from the employee’s start date (plus the time remaining until the first day of the next calendar month if the employee’s start date is not the first day of a calendar month).
  • If a plan imposes a cumulative hours of service eligibility requirement, the final regulations confirm that (1) it may not exceed 1,200 hours for the year; and (2) the requirement may only be applied once (i.e., it may not be applied to the same individual year after year). If an employee satisfies the service requirement, coverage must begin no later than the 91st day after the employee becomes eligible.
  • All calendar days, including weekends and holidays, are counted towards the 90-day waiting period limitation.
  • As referenced above, the final regulations state that a plan may require an employee to complete a reasonable and bona fide employment-based orientation period as a condition of eligibility and start the waiting period on the first day after the end of the orientation period. The proposed regulations that were issued alongside the final rules define an orientation period as a period of up to one month (for example, from May 3, 2014 through June 2, 2014) during which an employer and employee would determine whether the employee’s employment was satisfactory to both, and commence standard orientation and training. Plans may rely on the proposed regulations’ definition of an orientation period at least through 2014.
  • For an employee who is rehired or who moves from a job classification that is ineligible for coverage to a position that is eligible, the final regulations state that a plan can treat the employee as a new employee and require him or her to meet the plan’s eligibility criteria and satisfy the plan’s waiting period again, as applicable, if reasonable under the circumstances.
  • For multiemployer plans, the final regulations recognize their unique operating structures and varying eligibility criteria via an example, allowing such plans to administer a waiting period of up to 90 days on the first day after an employee satisfies the plan’s eligibility criteria. In the example, the multiemployer plan allows employees to work hours of covered employment across multiple contributing employers and aggregates hours by calendar quarter for coverage to commence during the next calendar quarter.
  • The final regulations state that if a group health plan provides insured coverage, the health insurance issuer may rely on the eligibility information reported to it by an employer or other plan sponsor if: (1) the insurer requires the plan sponsor to make a representation regarding the plan’s terms of eligibility or waiting periods before an individual is eligible to become covered; and (2) the insurer has no specific knowledge of any waiting period that would exceed the permitted 90-day period.
  • As the ACA prohibits preexisting condition exclusion per­iods for plans that begin on or after January 1, 2014, the final regulations eliminate the requirement to issue certificates of creditable coverage as of December 31, 2014.

Next Steps

To help ensure timely compliance, plan sponsors should examine any eligibility criteria applicable to employees and dependents and ensure that coverage commences no later than the 91st day after the individual becomes eligible. This may require amendments to the plan’s provisions, preparation of a summary of material modifications, and communications with health insurance issuers to ensure coverage can commence in a timely manner. If you have any questions, please contact the author of this article.