Published on June 26, 2014

PERSONNEL MATTERS: Final healthcare reform rule permits orientation period

By Jerry Geisel, Crain News Service

WASHINGTON (June 26, 2014) — Employers are allowed to impose “orientation” periods of up to one month before a maximum 90-day waiting period on the start of healthcare coverage for new employees, under final healthcare law reform rules.

The rules — issued June 20 jointly by the U.S. departments of Health and Human Services, Labor and Treasury — finalize and clarify how such orientation periods would work.

Under the final regulations, the one-month orientation period would be calculated by adding one calendar month and subtracting one calendar day, measured from an employee’s starting day.

For example, if an employee’s start date is May 3, the last day of the orientation period would be June 2, the agencies said.

The agencies noted that employer orientations are “commonplace” and that they do not question the “reasonableness” of such periods as long as they are short.

“The danger of abuse increases, however, as the length of the period expands. Accordingly, the final regulations provide that one month is the maximum allowed length of an employment-based orientation period. The creation of a clear maximum prevents abuse and facilitates compliance,” the agencies said.

Definitive statistics are not available on the prevalence of employer orientation periods. However, few employers impose 90-day waiting periods — the maximum allowed, starting in 2015, under the Patient Protection and Affordable Care Act — before new employees can get coverage.

A 2013 Kaiser Family Foundation survey found an overall average waiting period of 1.8 months, with just 9 percent of surveyed employers imposing a waiting period of at least four months for newly hired employees.

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This report appeared on businessinsurance.com, the website of Business Insurance, a Chicago-based sister publication of Tire Business.

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