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February 24, 2014 01:00 AM

Healthcare reform rules limit benefits waiting period

Jerry Geisel, Crain News Service
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    WASHINGTON (Feb. 24, 2014) — Newly hired employees must be offered health insurance coverage no later than 90 days after they begin work under final healthcare reform law regulations.

    The regulations, jointly issued Feb. 20 by the Internal Revenue Service and the departments of Labor and Health and Human Services, involve a provision in the Patient Protection and Affordable Care Act that will limit health insurance coverage waiting periods to 90 days, effective in 2015.

    Like the proposed regulations, the final rules say waiting periods may not extend beyond 90 days, with all calendar days, including weekends and holidays, counted.

    In the case of an employer that imposes a 90-day waiting period and the 91st day is a weekend or holiday, the employer could make coverage available prior to the 91st day for administrative ease.

    But coverage cannot be offered later than the 91st day, regulators said.

    Orientation period allowed

    However, employers could impose an "orientation period" before the 90-day waiting period would be triggered, the agencies said.

    Such orientation periods "are intended to provide plan sponsors with flexibility to continue the common practice of utilizing a probationary or trial period to determine whether a new employee will be able to handle the challenges of the job, while providing protections against excessive waiting periods for such employees," the agencies said.

    The agencies proposed a one-month limit on orientation periods.

    Regulators "are proposing a new added eligibility requirement that can be imposed before the waiting period begins. This would be welcome news for employers struggling with the 90-day waiting period limit.

    "Essentially, an employer could set up an employment-based orientation period for new employees that precedes a waiting period," said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.

    Few employers would be significantly affected by a 90-day waiting period as that long a waiting period is relatively rare. Only 9 percent of newly hired employees are subject to a waiting period of at least four months with an overall average waiting period of 1.8 months, the regulations said, citing a 2013 Kaiser Family Foundation survey.

    ________________________________________________

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

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