90 Day Waiting Period & Orientation Period
ACA: 90-Day Limit on Waiting Periods
Group health plans and insurers are prohibited from imposing a waiting period exceeding 90 days. “Waiting period” is the time that must pass before coverage for an employee or dependent (who is otherwise eligible to enroll under the plan’s terms) becomes effective. The waiting period begins on the first day that the employee meets the plan’s eligibility definition (e.g., date of hire) and ends on the day before coverage begins. (Delays due to the employee’s special enrollment or late enrollment are not counted toward the waiting period limit.). All calendar days are counted. Coverage must begin no later than the 91st calendar day. Coverage cannot be delayed until the “first of the month” if that would exceed the maximum 90-day waiting period.
- Example - Becky is hired February 1, 2023, in a part-time position not eligible for benefits. On June 19, 2023, Becky is promoted to a full-time position eligible for benefits. The maximum waiting period cannot extend longer than 90 calendar days counting from June 19. Becky’s coverage must begin no later than September 17, 2023 (if Becky enrolls for coverage on a timely basis).
For plans that define eligibility based on cumulative service (e.g., employee becomes eligible after completing 1,200 hours of service), the waiting period begins on the day the employee satisfies the cumulative service requirement. The maximum allowable cumulative service requirement is 1,200 hours. Examples of other permissible eligibility requirements include meeting certain sales goals or earning a certain level commission. In these cases, the waiting period begins after the employee completes the eligibility requirement.
Employers may require new hires to complete a reasonable and bona-fide employment-based orientation period of up to one month. The orientation period is provided so “that an employer and employee will evaluate whether the employment situation is satisfactory for each party, and standard orientation and training processes will begin.” There are no specific rules in the regulations that require the employer to implement some kind of formal training program to take advantage of the orientation period. However, employers using this approach should document it in existing HR policies and procedures.
- Orientation period can be no longer than 1 calendar month - The orientation period can be no longer than 1 calendar month beginning on the employee's start date. For example, if the employee’s start date is August 30, the orientation period is allowed through September 29, and the waiting period must begin no later than September 30.
Interaction with ACA Employer Shared Responsibility Rules
To avoid possible penalties under the employer shared responsibility rules, coverage must be effective for full-time employees no later than 1st day of the 4th full calendar month from hire date. If an employer imposes a full 1-month orientation period plus a full 90-day waiting period, coverage may not actually begin until sometime into the 4th month, exposing the employer to possible 4980H penalties. On the other hand, employers choosing to use a 1-month orientation period plus a waiting period of the 1st following 60 days or less, will always be compliant with the shared responsibility rules, since coverage would be effective prior to the 1st day of the 4th full calendar month.
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