On February 20, 2014, the DOL, HHS and Treasury issued Final Regulations on the 90-day waiting period requirement in the Affordable Care Act (ACA). A few changes will be welcome news to employers.

  

The 90 day waiting period provision mandates that coverage under a group health plan be made available to "otherwise eligible" employees and their dependents no later than 90 calendar days from an employee's eligibility date. The 90-day waiting period provision applies to employers of all sizes and all plan types, including grandfathered plans and self-insured plans. The provision takes effect on the first day of the new plan year in 2014.

For the most part, these regulations adopt the rules in the Proposed Regulations, issued on March 21, 2013. The Proposed Regulations remain in effect for plan years starting in 2014. The Final Regulations take effect for plan years starting in 2015, but employers can rely on the new guidance now.

These are some of the rules that remain the same from the Proposed Regulations:

  

Variable-hour employees: Employers may use a 12-month measurement period to determine if variable-hour employees meet eligibility requirements. Coverage must become effective no later than 13 months from the hire date or the first of the next month if the hire date was not on the first of the month.

Hours banks: Employers may implement an hours bank as an eligibility condition if the hours do not exceed 1,200 hours before the waiting period would start.

  

Holiday/weekend rules: They count toward the 90-day maximum. If day 91 falls on a holiday or weekend, the start date must occur before then, not after.

  

The Final Regulations add a few new wrinkles:

Orientation period: Employers can require employees to complete a "reasonable and bona fide employment-based orientation period" before the waiting period starts. The agencies requested comments on the maximum length of the orientation period, suggesting that one month would be reasonable.

Such orientation periods "are intended to provide plan sponsors with flexibility to continue the common practice of utilizing a probationary or trial period to determine whether a new employee will be able to handle the challenges of the job, while providing protections against excessive waiting periods for such employees," the agencies said.

Regulators "are proposing a new added eligibility requirement that can be imposed before the waiting period begins. This would be welcome news for employers struggling with the 90-day waiting period limit. Essentially, an employer could set up an employment-based orientation period for new employees that precedes a waiting period," said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.

Rehires: Employers can treat rehired employees as newly eligible for the plan and thus subject to a new waiting period. They can do the same for employees who transfer from a benefits-eligible job to a non-eligible job and back to a benefits-eligible job. The employer's rules must be "reasonable under the circumstances." In other words, the termination and rehire cannot be a subterfuge for adding a second waiting period.

Retirement to rehire: The agencies clarified that an employee who retires with no expectation of providing further services but is later rehired (in the example, the gap was three months) can be subject to a new waiting period.