The IRS, the Department of Labor and the Department of Health and Human Services have issued proposed regulations (REG-122706-12) to implement the 90-day waiting period limitation added to the Public Health Service Act by the Patient Protection and Affordable Care Act. Under the new rules, a group health plan and a health insurance issuer offering group health insurance coverage may not institute any waiting period for coverage that exceeds 90 days. This rule applies to health insurance issuers and insured and self-insured group health plans, for plan years beginning on or after Jan. 1, 2014.
If, under the terms of the plan, an employee can elect coverage that becomes effective on a date that does not exceed the 90-day waiting period limitation, the coverage complies with the waiting period rules. A plan or issuer is not deemed in violation of the waiting period rules merely because individuals choose to elect coverage beyond the end of the 90-day waiting period. The proposed regulations clarify that the 90-day period includes all calendar days, including the actual enrollment date.
The proposed regulations provide guidance on how the 90-day waiting period limitation applies when the plan includes eligibility conditions (e.g., an employee must work 30 hours per week). These rules allow a measurement period that is similar to the measurement period under the employer shared-responsibility rules and applicable excise tax for a failure to offer coverage to full-time employees.
A plan is not required to use a waiting period and can instead allow employees to begin participating in the health plan as soon as they become eligible. A failure to comply with the new 90-day waiting period limitation (e.g., applying a waiting period that exceeds 90 days) results in a penalty equal to $100 per day per affected individual.
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