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Does the PPACA regulate eligibility periods imposed by individual companies for new hires to wait before they can participate in a company-sponsored health plan? Section 2708 of the Public Health Service Act (PHSA), as added by PPACA, prohibits group health plans and health insurance issuers offering group health insurance coverage from applying any waiting period that exceeds 90 days, effective beginning in 2014. It is not yet clear how this restriction will apply with respect to eligibility period requirements imposed on newly hired employees, but pre-PPACA guidance under the HIPAA rules and a recent IRS Notice suggest that future guidance could allow the continued use of certain eligibility period requirements. Section 2704(b)(4) of the PHSA (and identical definitions in the Code and ERISA) defines the term “waiting period” to mean “with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.” Joint final regulations issued by the Departments of Treasury, Labor, and Health and Human Services (the “Agencies”) under the HIPAA rules define the term “waiting period” as “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 Agencies have not yet issued guidance regarding the PPACA waiting period limitation, but IRS Notice 2011-36 asks for comments on which employees are subject to the limitation, when a waiting period may apply consistent with the PPACA limitation, and how the 90-day limit should be calculated. It also requests comments on the application of the waiting period limitation to common employer eligibility and enrollment practices and the interaction between the waiting period limitation and PPACA employer mandate requirements. With respect to newly hired employees, it requests comments on the following scenarios: Employees becoming eligible to enroll in the employer’s plan after completing a service-based “probationary” period of three to six months; part-time employees who are offered coverage, but only after having worked for a period longer than 90 days; and employees becoming eligible to enroll when they are determined to have worked an average of a certain number of hours during a look-back period, with a 90-day waiting period being applied beginning once the employee is determined to be eligible to enroll.
Does the PPACA regulate eligibility periods imposed by individual companies for new hires to wait before they can participate in a company-sponsored health plan?
Section 2708 of the Public Health Service Act (PHSA), as added by PPACA, prohibits group health plans and health insurance issuers offering group health insurance coverage from applying any waiting period that exceeds 90 days, effective beginning in 2014. It is not yet clear how this restriction will apply with respect to eligibility period requirements imposed on newly hired employees, but pre-PPACA guidance under the HIPAA rules and a recent IRS Notice suggest that future guidance could allow the continued use of certain eligibility period requirements.
Section 2704(b)(4) of the PHSA (and identical definitions in the Code and ERISA) defines the term “waiting period” to mean “with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.” Joint final regulations issued by the Departments of Treasury, Labor, and Health and Human Services (the “Agencies”) under the HIPAA rules define the term “waiting period” as “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 Agencies have not yet issued guidance regarding the PPACA waiting period limitation, but IRS Notice 2011-36 asks for comments on which employees are subject to the limitation, when a waiting period may apply consistent with the PPACA limitation, and how the 90-day limit should be calculated. It also requests comments on the application of the waiting period limitation to common employer eligibility and enrollment practices and the interaction between the waiting period limitation and PPACA employer mandate requirements. With respect to newly hired employees, it requests comments on the following scenarios: Employees becoming eligible to enroll in the employer’s plan after completing a service-based “probationary” period of three to six months; part-time employees who are offered coverage, but only after having worked for a period longer than 90 days; and employees becoming eligible to enroll when they are determined to have worked an average of a certain number of hours during a look-back period, with a 90-day waiting period being applied beginning once the employee is determined to be eligible to enroll.