Understanding the ACA’s 90-Day Waiting Period Limitation
For employers looking to offer health insurance, the waiting period might seem like just another term thrown into the mix. But when a new hire joins your team, it’s important that you understand just what this fundamental concept means.
The ACA’s 90 day waiting period limitation requirement was rolled out in 2014 by the Affordable Care Act and states that any company offering health insurance must make it available to employees within the first 90 days of employment.
This article is meant to help employers understand the limitation and what it takes to comply. Reminder: Compliance with the waiting period does not indicate compliance with other ACA provisions (such as Pay or Play).
‘Waiting Period’ Definition
To put it simply, the waiting period is a block of time that requires an employee or dependent to wait before the health plan goes into effect. It streamlines access to health benefits by preventing eligible employees from having to wait for insurance coverage.
Conditions for Eligibility
A waiting period begins when an individual becomes “benefits-eligible,” meaning your new hires must satisfy their waiting period from their first day as a full-time employee. Most of the time, coverage conditions for eligibility under a group health plan’s terms are permissible unless the condition is created to avoid compliance with the 90-day limitation.
With that in mind, there are federal rules that apply to certain conditions for eligibility:
- Cumulative Service Requirements – An eligibility condition that requires completion of a cumulative number of hours is permitted if the required hours do not receive 1,200 hours. The rule is intended to act as a one-time eligibility requirement and cannot be imposed
- Orientation Periods – An eligibility condition that stipulates an orientation period is permitted only if it does not exceed one month, and the 90-day waiting period begins on the first day after the period. To measure the correct start date of the 90-day waiting period, subtract one calendar day. For example, if John Smith begins orientation on April 3, his last permitted day of orientation will be May 2.
The 90-Day Limitation
Once an employee’s eligibility for coverage is determined, you can wait a maximum of 90 days before activating the individual’s health benefits. But ‘90 days’ does not equal three months – for the purposes of the 90-day limit, all calendar days are counted, including holidays and weekends.
Pro Tip: Our team of benefits advisers recommends you begin coverage within your new hire’s first month of employment.
- For the latest guidance on the ACA’s 90-day waiting period limitation, visit the U.S. Department of Labor’s page.
- If you’d like more information on how the ACA affects your small business, please check our Business Health Insurance page.
- You can also contact Shop Benefits with any questions by filling out a contact form. We’ll be happy to provide you with the answers!
At Shop Benefits, we know how complex small business health insurance can be. That’s why we’re here – to help you navigate the group healthcare process and provide you with valuable insight into the world of health benefits.
If you’re interested in discovering which options are best for your business, please contact us online or give us a ring at (404) 256-2171 and ask for Al Schiebel. Get your affordable quote today!