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March 20, 2014

Feds Release Rules on ACA Waiting Limits

On Feb. 20, the Internal Revenue Service (IRS), Dept. of Labor (DOL) and Dept. of Health and Human Services (HHS) jointly released two sets of regulations — one final, and one proposed — on the 90-day waiting period limit under the Affordable Care Act (ACA).

  • The final regulations generally confirm the proposed regulations from March 2013, with the addition of provisions for a “reasonable and bona fide employment-related orientation period” and for terminated/rehired employees, respectively.
  • The notice of proposed rule-making specifies that the orientation period cannot exceed a maximum of one month from the date an employee begins work in an eligible position.

Highlights include:

  • The 90-day maximum waiting period does not mean the first of the month after 90 days of employment. The waiting period is calculated by counting all calendar days, including weekends and holidays. Coverage must be offered no later than the 91st calendar day. If the 91st day is a weekend, coverage must be available on or before that day.
  • Employees who are terminated and rehired, or who transfer from benefit-eligible to non-eligible positions and then back again, can be treated as new employees, subject to a new waiting period.
  • The employer can impose a “reasonable and bona fide employment-related orientation period.” The proposed regulations (see below) define reasonable as a maximum of one month.
  • All plans must continue providing HIPAA Certificates of Creditable Coverage until Dec. 31, 2014, because individuals who lose coverage in 2014 may still need one to receive credit from their new plan. Since the ACA pre-existing conditions ban does not apply until the first day of the 2014 plan year, plans with a Dec. 1 start date may continue to have limits on pre-existing conditions until Dec. 1, 2014.
  • One month is the maximum allowed length of any reasonable and bona fide employment-based orientation period. “Bona fide orientation period” is defined as one that is not designed to avoid compliance with the 90-day waiting period maximum.

Both sets of rules are effective for plan years beginning on or after Jan. 1, 2015. However, the March 2013 proposed regulations were effective for plan years beginning on or after Jan. 1, 2014, so for 2014 a plan will be in compliance if it complies with either the 2013 proposed or the 2014 final regulations.