Agencies Issue Proposed Regulations On 90-Day Waiting Period Limitation Under ACA

The Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services (the Departments) have issued a proposed rule that implements the 90-day waiting period limitation under the Patient Protection and Affordable Care Act (ACA). The proposed rule is scheduled to be published in the March 21 Federal Register.

The ACA provides that a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days. This 90-day waiting period limitation applies to both grandfathered and non-grandfathered group health plans and group health insurance coverage for plan years beginning on or after Jan. 1, 2014. The Departments issued guidance on this provision in February and August 2012. The August 2012 guidance indicated that health insurance issuers may rely on the guidance through the end of 2014, and thus, for purposes of enforcement by the Departments, compliance with the approach set forth in the August 2012 guidance will be considered to be compliant with the provisions of the ACA through the end of 2014. The new proposed rule provides new technical amendments to the provision.

Prohibition on waiting periods longer than 90 days. The proposed regulation does not allow a group health plan, and a health insurance issuer offering group health insurance coverage, to apply any waiting period that exceeds 90 days. Neither a plan nor an issuer offering coverage is required to have any waiting period. 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, the Departments noted, and the plan or issuer will not be considered to violate the waiting period rules merely because individuals choose to elect coverage beyond the end of the 90-day waiting period.

Under the ACA, a waiting period was defined to be the period that must pass with respect to an individual before the individual is eligible to be covered for benefits under the terms of the plan. However, the Health Insurance Portability and Accountability Act (HIPAA) defines a waiting period to mean 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. The proposed rule uses the HIPAA definition of waiting period. The proposed regulations also would continue to include the clarification that, 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 that set forth in the Departments’ 2004 HIPAA regulations governing special enrollment.

Eligibility criteria. The proposed rule also sets forth rules governing the relationship between a plan’s eligibility criteria and the 90-day waiting period limitation. 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). However, the 90-day waiting period limitation generally does not require the plan sponsor to offer coverage to any particular employee or class of employees (including, for example, part-time employees). Instead, the proposed regulations would prohibit requiring otherwise eligible participants and beneficiaries to wait more than 90 days before coverage is effective.

Counting days. The proposed rule also clarifies the method for counting days when applying a 90-day waiting period. Under the proposed regulations, due to the clear text of the ACA, the waiting period may not extend beyond 90 days and all calendar days are counted beginning on the enrollment date, including weekends and holidays. For a plan with a waiting period, “enrollment date” is defined as the first day of the waiting period. If, with respect to a plan or issuer imposing a 90-day waiting period, the 91st day is a weekend or holiday, the plan or issuer may choose to permit coverage to be effective earlier than the 91st day, for administrative convenience. However, a plan or issuer may not make the effective date of coverage later than the 91st day.

Comments are due 60 days after publication in the Federal Register, and may be submitted electronically via; or mailed to Office of Health Plan Standards and Compliance Assistance, EBSA, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention: Waiting Periods.

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