90 Day Waiting Period Limit: Beginning in 2014, a group health plan may not use a waiting period that exceeds 90 days (see IRS Notice 2012-58). A waiting period is 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. Being eligible for coverage means having met the plan’s eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the plan’s terms). Accordingly, an entry date of the first day of the month following 90 days of employment will not be permitted since the elapsed waiting period exceeds 90 days.
Other conditions for eligibility under the terms of a group health plan are generally permissible, unless the condition is designed to avoid compliance with the 90-day waiting period limitation.
Plans can also begin the 90 day waiting period on the day on which the employee actually elects coverage, as opposed to the day he or she is eligible. Therefore, a plan or issuer will not be considered to have violated this provision merely because an employee takes additional time to elect coverage.
For employees who work variable hours, an employer may not be able to determine if they are meeting the eligibility requirements for coverage. In this case, the employer may have a measurement period of up to 12 months to determine full-time eligibility, consistent with the timeframe used by the employer to determine employer shared responsibility (see the Play or Pay FTE Safe Harbor post). The employer can then apply the 90-day waiting period after the measurement period, as long as coverage is made effective no later than 13 months from the employee’s start date. If the employee’s start date is not the first of the month, then the employer can measure the 13 months from the beginning of the first of the month following the start date.
If a plan requires an employee to accumulate a certain number of hours of service in order to be eligible, the number of hours required cannot exceed 1200.