90-Day Waiting Period and Technical Amendments
Proposed Rule on 90-Day Waiting Period Limitation and Technical Amendments to Certain Health Coverage Requirements Under the Affordable Care Act
March 19, 2013
The Department of Health and Human Services (HHS), Department of Labor (DOL) and the Internal Revenue Service (IRS) released a Proposed Rule on 90-day waiting period limitation and technical amendments to certain health coverage requirements under the Affordable Care Act (ACA). The Proposed Rule would also eliminate the Health Insurance Portability and Accountability Act (HIPAA) notices of creditable coverage, allowing health plans to rely on information provided by employers. The rule also proposes conforming changes to the pre-existing condition exclusion provisions of the Public Health Service Act (PHSA) and Employee Retirement Income Security Act (ERISA).
The proposed regulations generally would apply to grandfathered and non-grandfathered plans for plan years beginning on or after Jan.1, 2014. However, to the extent final regulations or other guidance with respect to the 90-day waiting period limitation is more restrictive on plans and issuers than the proposed regulations, the final regulations or other guidance will not be effective prior to Jan. 1, 2015.
The following is a summary of the major provisions of the Proposed Rule:
- The definition of waiting period is the same as that used in the 2004 Health Insurance Portability and Accountability Act (HIPAA) regulations (i.e., 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).
- A group health plan, and a health insurance issuer offering group health insurance coverage, cannot apply any waiting period that exceeds 90 days.
- If an employee or dependent enrolls as a late enrollee or special enrollee, any period before such late or special enrollment is not a waiting period.
- The effective date of coverage for special enrollees continues to be the same as that used in the 2004 HIPAA regulations governing special enrollment. Specifically, 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).
- Eligibility conditions that are based solely on the lapse of a time period would be permissible for no more than 90 days. 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 under the PHSA and these proposed regulations unless the condition is designed to avoid compliance with the 90-day waiting period limitation.
- Proposes an approach when applying waiting periods to variable-hour employees in cases in which a specified number of hours of service per period (such as 30 hours per week or 250 hours per quarter) is a plan eligibility condition. Under the proposed regulations, 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 can’t be determined that a newly-hired employee is reasonably expected to regularly work that number of hours per period (or work full-time), the plan may take a reasonable period of time to determine whether the employee meets the plan's eligibility condition.
- If a group health plan or health insurance issuer conditions eligibility on any employee’s (part-time or full-time) 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.
- Allows an issuer to rely on the eligibility information reported to it by an employer (or other plan sponsor) and not be considered to violate the requirements of these proposed regulations in administering the 90-day waiting period limitation if the issuer requires the plan sponsor to make a representation regarding the terms of any eligibility conditions or waiting periods imposed by the plan sponsor before an individual is eligible to become covered under the terms of the employer’s plan (and requires the plan sponsor to update this representation with any changes), and the issuer has no specific knowledge of the imposition of a waiting period that would exceed the permitted 90-day period.
- Proposes to eliminate the requirement to issue a certificate of creditable coverage after Dec. 31, 2014 (certificates are needed through then for a plan that operates with a plan year extending into 2014).
To learn more about the Proposed Rule on 90-day waiting period limitation and technical amendments to certain health coverage requirements under the ACA, see the attached document.