On February 20, 2014, the Departments of Labor, Treasury, and Health and Human Services (the “Agencies”) issued final regulations implementing the 90-day limit on waiting periods for health insurance coverage. The final regulations generally adopt the previously-issued guidance discussed in our prior client alert. According to the final regulations, “waiting period” is defined as the period of time that must pass before coverage for an employee or dependent, who is otherwise eligible to enroll under the terms of the plan, can become effective. For this purpose, being eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification). Please note that the final regulations do not require that employers offer health insurance coverage to any particular class of employees.
While a waiting period must not extend beyond 90 days, employers may implement conditions of eligibility that require an employee to wait longer before health insurance coverage begins. For instance, the final regulations permit employers to implement a reasonable “orientation period.” However, the regulations discussing the specifics of the orientation period are still in proposed form. At this time, the maximum orientation period is still 90 days.
Additionally, the final regulations continue to allow employers to require employees to complete a cumulative 1,200 hours of service prior to becoming eligible to enroll in the plan. However, in such a case, coverage under the plan must be provided no later than the 91st day after the employee satisfies the 1,200 hours of service requirement.
The final regulations give new guidance regarding former employees and multiemployer plans. Specifically, the final regulations provide that a former employee who is rehired may be treated as newly eligible for coverage upon rehire. For multiemployer plans, the final regulations also provide that an employer may, as part of a collective bargaining agreement, utilize an eligibility provision that allows employees to become eligible for coverage by working hours of covered employment across multiple contributing employers.
The final regulations will be effective for group health plans and group health insurance issuers for plan years beginning after January 1, 2015. For plan years during 2014, plans may either comply with the final regulations or the proposed regulations.
To view the final regulations, click here.
For more information regarding the 90-day waiting period limitation, please contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell.