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Final & prop regs clarify ACA’s 90-day waiting period limit for employer health coverage

February 21, 2014

T.D. 9656, 02/20/2014; Reg. § 54.9801-1; Reg. § 54.9801-2; Reg. § 54.9801-3; Reg. § 54.9801-4; Reg. § 54.9801-5 ; Reg. § 54.9801-6; Reg. § 54.9802-1 ; Reg. § 9815-2708; Reg. § 54.9831-1; Labor Reg. 2590.701-1; Labor Reg. 2590.701-2; ; Labor Reg. 2590.701-3; Labor Reg. 2590.701-4 ; Labor Reg. 2590.701-5; Labor Reg. 2590.701-6; Labor Reg. 2590.701-7; Labor Reg. 2590.702 ; Labor Reg. 2590.715-2708; Labor Reg. 2590.731; Labor Reg. 2590.732;Preamble to Prop Reg02/20/2014; Prop Reg § 54.9815-2708; Prop Labor Reg 2590.715-2708

IRS, DOL, and HHS (the “Departments”) have issued final and proposed regs that explain the rules on the 90-day waiting period limitation under the Affordable Care Act (ACA), which applies to employer group health plans and health insurance issuers offering group health insurance coverage for employees. The final regs generally adopt the changes of the previously issued proposed regs, while the newly issued proposed regs would clarify the maximum allowed length of any reasonable and bona fide employment-based orientation period, consistent with the 90-day waiting period limitation.

Background. For plan years beginning on or after Jan. 1, 2014, ACA provides that an employer group health plan or group health insurance issuer offering employer group health insurance cannot apply any waiting period (for employee coverage) that exceeds 90 days. Code Sec. 9801(b)(4) and ERISA § 701(b)(4) define a waiting period to be the period that must pass before an individual is eligible to be covered for benefits under the terms of the plan.

In 2013, the Departments issued proposed regs that set forth the parameters for complying with the 90-day waiting period, as well as FAQs on the reliance period under the previous proposed regs to the extent that the final regs are more restrictive.

Final and new proposed regs. The final regs generally retain the guidance set forth in the previously issued proposed regs, but also provide rules on:


  • modifications related to the satisfaction of a reasonable and bona fide employment-based orientation period;
  • application of the 90-day limitation period to former employees;
  • the treatment of multiemployer plans;
  • the extent to which a health insurer may rely on eligibility information provided by an employer; and
  • the applicable effective date and reliance periods related to the guidance on the 90-day waiting period.


… Orientation period. Under the final regs, after an individual is determined to be eligible for coverage under the terms of the plan, any waiting period may not extend beyond 90-days, and all calendar days are counted beginning on the enrollment date, including weekends and holidays. However, a requirement to successfully complete a reasonable and bona fide employment-based orientation period may be imposed as a condition of eligibility for coverage under the plan. The previously issued proposed regs included two examples, which included an eligible job classification and achieving job-licensure requirements specified in the plans. The final regs add a third example involving a permissible substantive eligibility condition.

The final regs do not specify the circumstances under which the duration of an orientation period would be considered reasonable or bona fide. However, the new proposed regs would provide one month as the maximum length of any orientation period, meaning generally a period that begins on any day of a calendar month and is determined by adding one calendar month, and then subtracting one calendar day. The Departments will consider compliance with the new proposed regs to constitute reasonable and bona fide employment-based orientation under ACA through the end of 2014.

… Former employees. The final regs also provide that a former employee who is rehired may be treated as newly eligible for coverage upon rehire. Thus, the plan or health insurance issuer may require that the individual meet the plan’s eligibility criteria, and satisfy the plan’s waiting period anew, if the waiting period is reasonable under the circumstances. The termination and rehire would not be considered reasonable if it is a subterfuge to avoid compliance with the 90-day waiting period limitation. This same analysis applies to an individual who moves to a job classification that is ineligible for coverage under the plan, but then later moves back to an eligible job classification.

… Multiemployer plans. In an effort to clarify the treatment of multiemployer plans, the final regs include an example that is consistent with the guidance issued in FAQs issued on Sept. 4, 2013 . Thus, if a multiemployer plan operating under a collective bargaining agreement has an eligibility provision that allows employees to become eligible for coverage by working hours of covered employment across multiple contributing employers, that would be permissible, and not viewed as designed to avoid compliance with the 90-day waiting period requirement.

… Eligibility information. To the extent coverage under a group health plan is insured by a health insurance issuer, the final regs permit the issuer to rely on eligibility information reported to the issuer by the employer. The issuer will not be considered to violate the 90-day waiting period if (1) 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 plan (and requires the plan sponsor to update this representation with any applicable changes); and (2) the issuer has no specific knowledge of the imposition of a waiting period that would exceed the 90-day waiting period.

… Effective date and reliance period. Finally, the guidance clarifies that the final regs apply to group health plans and group health insurance issuers for plan years beginning on or after Jan. 1, 2015. For plan years beginning in 2014, the Departments will consider compliance with either the previously issued proposed regs or the new final regulations to constitute compliance with ACA’s 90-day waiting period limitation. The newly issued proposed regs may be relied upon at least through the end of 2014.