Facilitating employment comes second to ensuring that employees remain adequately financially protected as well as have adequate healthcare access. Yet, employers and employees alike find themselves trying to understand the 90 day waiting period under the Affordable Care Act (ACA). In this article, we discuss the 90 day waiting period laws that regulation it, employer duties as well as tips and tricks to keep your corporation in compliance without sacrificing the welfare of your employees.
The ACA 90 Day Waiting period
Group health plans and health insurance issuers offering group coverage may not impose any preexisting condition exclusion period for individuals secured beyond 90 days. In order to get healthcare coverage to eligible employees on a timely basis, this requirement is necessary. Although confusion and frustration with implementation details have plagued employers, in particular the design of health insurance plans, the quandary today is whether or not that criticism is sufficiently guided by theory.
The rules permit an employers inclusion of a bona fide employment based orientation period, which extends the waiting period beyond 90 days. The tradeoff of flexibility for compliance challenges centers around the Employer Shared Responsibility (ESR) provisions of the ACA.
Eligibility Conditions permitting this
Eligibility may be conditional upon employers before the 90 day waiting period begins. On organizations frequently practice a one-month orientation period for evaluation, orientation and training. The orientation period has ended, and immediately begins the waiting period.
For example, if an employee’s orientation period ends on Oct. 5, and the 90 day waiting period begins the day after that, coverage may begin the first of the month after 90 days. With this design, ACA regulations are still met, and the cyclicality in payroll aligns with those standard cycles.
Balancing an Organization’s Flexibility with Compliance
The ACA regulations give some flexibility, but employers must take care to design their plans so they don’t attract a penalty under the Employer Shared Responsibility (ESR) rules. The rules prescribe that on the first day of the fourth calendar month (and throughout the course of employment), the minimum value required coverage must be offered to any full time employees.
As an example, if an employer has coverage starting after orientation on the 91st day, they could be subject to ESR assessments if coverage isn’t started by the required date. Both of these can be addressed simply with an adjustment that makes coverage effective on the first of the month following the waiting period.
Practical Examples of Compliance
Husky Company Example
Scenario: Orientation ends on October 5, and the 90 day waiting period ends on January 3.
Outcome: They begin on Jan. 1, covering a new careable period and avoiding an ESR penalty.
Duck Inc. Example
Scenario: Coverage starts up January 4, and orientation ends October 5.
Issue: While compliant with the 90-day waiting period rule this coverage does not meet ESR requirements and is therefore open to penalties.
Solution: Change the eligibilty rule to make coverage effective January 1.
A Compliant Health Insurance Plan Choice Design
To maintain compliance while utilizing the ACA’s flexibility, employers should:
Set up eligibility criteria clearly: orientation period and waiting period.
The first day of coverage should start 90 days after employment.
Make sure health insurance plans conform with the 90 day waiting period rule and ESR requirements.
For example, eligibility rules could state:
“The plan includes a one-month orientation period, followed by a waiting period, with coverage effective the first of the month after 90 days of employment.”
Regular Reviews and Updates.
Compliance requirements for ACA are subject to updates, interpretations. Employers should discover what’s changing, and seek advice regarding whether their health insurance plan complies with current laws.
Regular reviews also help employers keep such design flaws at bay, and help suppliers and be watched out for any blunders and rectified if there are any.
Conclusion
The 90 day waiting period gives employers room to work with health insurance plans but they have to stay within ACA rules. To avoid penalties, employers must balance flexibility with compliance requirements for the ESR and to offer ESR coverage in a timely fashion for employees.
By taking a proactive perspective to plan design by reviewing eligibility conditions on a frequent basis and aligning dates of coverage with regulatory guidelines, employers maintain a satisfied, healthy workforce, while avoiding non-compliance.
