I understand there is a provision in PPACA that prohibits employers from imposing a waiting period over 90 days. Has any guidance been issued on the PPACA waiting period limitation?
PPACA added section 2708 of the Public Health Service Act (PHSA), which generally prohibits group health plans and health insurance issuers offering group health insurance coverage from applying any waiting period that exceeds 90 days. This provision is also incorporated by reference into section 715 of the Employee Retirement Income Security Act (ERISA) and section 9815 of the Internal Revenue Code (Code). The waiting period limitation is generally effective beginning in 2014.
For purposes of the PPACA waiting period limitation, section 2704(b)(4) of the PHSA 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.” (Code section 9801(b)(4) and ERISA section 701(b)(4) provide identical definitions.) Joint final regulations issued by the Departments of Treasury, Labor, and Health and Human Services (the “Agencies”) prior to PPACA with respect to the HIPAA requirements 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.” See Treas. Reg. § 54.9801-3(a)(3)(iii); DOL Reg. 29 CFR 701-3(a)(3)(iii); HHS Reg. 45 CFR 146.111(a)(3)(iii).
The Agencies have not yet issued guidance regarding the PPACA waiting period limitation. The IRS and Treasury did, however, recently issue Notice 2011-36 (the “Notice”), which, among other things, requests comments on the waiting period limitation and sheds some light on the issues the Agencies may address in future guidance.
The Notice 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 "shared responsibility" employer mandate requirements, including the following scenarios:
- Employees becoming eligible to enroll in the employer's plan 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.
- Employees becoming eligible to enroll in the employer's plan after completing a service-based "probationary" period of from 3 to 6 months.
- Employees hired as seasonal workers who are not eligible to enroll in the employer's plan, even if the employee works a sufficient number of hours to satisfy the plan's eligibility requirement for non-seasonal employees.
- Part-time employees who are offered coverage, but only after having worked for longer than a 90-day period.
Comments are due by June 17, 2011.
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Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C. She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.
Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.
PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.