Friday, February 21, 2014

Obama Admin. Announces Final Rule on 90-day Waiting Period Limitation & Addition of 1-Month Orientation Period

Remember that this rule is superseded by the 60-day rule for fully insured plans in California   But the below is very relevant for self-funded plans which are not governed by the Californa 60-day rule.  

Also note that they are considering adding a one-month orientation period, which could lengthen the 90-day period by a month.  The proposed regulations provide that they may be relied upon at least until January 1, 2015 allowing for an "Orientation" period.  The proposed regulations state on page 7 of the proposed Rulemaking:

The Departments invite comments on these proposed regulations. The Departments will consider compliance with these proposed regulations to constitute compliance with PHS Act section 2708 at least through the end of 2014. To the extent final regulations or other guidance with respect to the application of the 90-day waiting period limitation to orientation periods is more restrictive on plans and issuers, the final regulations or other guidance will not be effective prior to January 1, 2015, and will provide plans and issuers a reasonable time period to comply. 

An Orientation period is: (Page 6-7 of the proposed regulations)

Final regulations published elsewhere in this edition of the Federal Register set forth rules governing the relationship between a plan’s eligibility criteria and the 90-day waiting period limitation. Specifically, the final regulations provide that being otherwise eligible to enroll in a plan means having met the plan's substantive eligibility conditions (such as, for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan's terms, or satisfying a reasonable and bona fide employment-based orientation period). Under the final regulations, after an individual is determined to be otherwise 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.

The final regulations do not specify the facts and circumstances under which an employment-based orientation period would not be considered “reasonable and bona fide.” These proposed regulations would provide that one month is the maximum allowed length of any reasonable and bona fide employment-based orientation period. During an orientation period, the Departments envision that an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin. Under these proposed regulations, one month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage. For example, if an employee’s start date in an otherwise eligible position is May 3, the last permitted day of the orientation period is June 2. Similarly, if an employee’s start date in an otherwise eligible position is October 1, the last permitted day of the orientation period is October 31. If there is not a corresponding date in the next calendar month upon adding a calendar month, the last permitted day of the orientation period is the last day of the next calendar month. 

For example, if the employee’s start date is January 30, the last permitted day of the orientation period is February 28 (or February 29 in a leap year). Similarly, if the employee’s start date is August 31, the last permitted day of the orientation period is September 30. If a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

WASHINGTON — The U.S. Departments of Labor, Treasury, and Health and Human Services have announced the publication of final regulations implementing a 90-day limit on waiting periods for health coverage.
"This is a common sense measure that helps workers access employer-sponsored health insurance while providing employers flexibility," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.
The final regulations require that no group health plan or group health insurance issuer impose a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage. The rules do not require coverage be offered to any particular individual or class of individuals.
To ensure that eligibility conditions based solely on the passage of time are not used to evade the waiting period limit, the rules state that such conditions cannot exceed 90 days. Other conditions for eligibility are generally permissible, such as meeting certain sales goals, earning a certain level of commission, or successfully completing an orientation period.
Additionally, requiring employees to complete a certain number of hours before becoming eligible for coverage is generally allowed as long as the requirement is capped at 1200 hours. The rules also address situations in which it cannot be determined that a new employee will be working full-time.
The departments are issuing a companion proposed rule that would limit the maximum duration of an otherwise permissible orientation period to one month. This proposal will be open for public comment.
Both the final and proposed rules will be published in the Feb. 24, 2014 edition of the Federal Register and can also be viewed at the links below.

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