Eighty-nine pages of proposed regulations confirm that employers may not impose a group health plan waiting period of more than 90 days. No surprise there – the prohibition already was set forth in the 2010 health care reform law. A waiting period that provides for coverage to start on the first day of the month following 90 days or following three months of service is prohibited after the 2013 plan year.
The proposed regulations released by the Internal Revenue Service and Departments of Health and Human Services and Labor on March 18, 2013 are expected to be published March 21, 2013 and comments are due 60 days later.
“Waiting period” would continue to be defined, under the proposed regulations, as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. Being “otherwise eligible to enroll” in a plan means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job related licensure requirements specified in the plan’s terms).
Other conditions for eligibility under the terms of a group health plan (i.e., those that are not based solely on the lapse of a time period) are generally permissible unless the condition is designed to avoid compliance with the 90-day waiting period limitation.
In terms of coordination with the employer shared responsibility provisions, if a group health 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 that a newly-hired employee is reasonably expected to regularly work that number of hours per period, the plan may take a reasonable period of time to determine whether the employee meets the plan’s eligibility condition, which may include a measurement period of no more than 12 months that begins on any date between the employee’s start date and the first day of the first calendar month following the employee’s start date. Except for cases in which a waiting period that exceeds 90 days is imposed in addition to a measurement period, the time period for determining whether a variable-hour employee meets the plan’s hours of service per period eligibility condition will not be considered to be designed to avoid compliance with the 90-day waiting period limitation if coverage is made effective no later than 13 months from the employee’s start date plus – if the employee’s start date is not the first day of a calendar month – the time remaining until the first day of the next calendar month.
Note that, if a group health plan or health insurance issuer conditions eligibility on an employee having completed a number of cumulative hours of service, the eligibility condition is not considered to be designed to avoid compliance with the 90-day waiting period limitation if the cumulative hours-of-service requirement does not exceed 1,200 hours.