New regulations about waiting and orientation periods go into effect on Jan. 1, 2015. Here are the basics of what you’ll need to know.

What is a waiting period?
A waiting period is the period that passes before health plan coverage becomes effective for an eligible employee or dependent. For plans that require a waiting period, the Affordable Care Act (ACA) stipulates that the period may not exceed 90 days. (Some plans do not require waiting periods at all.) This 90-day requirement is true of both grandfathered and non-grandfathered* plans.

Some plans require that enrollees meet “substantive eligibility conditions.” Conditions might include factors such as being in an eligible job classification or meeting job-related licensure requirements. In these cases, the maximum 90-day waiting period does not have to begin until after the substantive eligibility conditions are met.

What is an orientation period?
Employers may have an “orientation period” where the employer and employee can evaluate whether the employment situation is mutually agreeable. Final ACA regulations allow for an orientation period that may last up to one month.

An orientation period is considered to be a “substantive eligibility condition.” This means that the 30-day time frame may be in addition to the 90-day waiting period. Keep in mind, however, that an orientation period may not be used as a means of simply extending the 90-day waiting period limitation.

What about a former employee who is rehired? That employee may be treated as newly eligible for coverage if it is reasonable under the circumstances. As in the case above, however, termination and rehire cannot be used to avoid the 90-day waiting period limitation.

What do you need to do?
All employers should carefully review their plan’s eligibility guidelines for the 90-day waiting period rules. In addition, you should also take a look at employer penalty provisions and nondiscrimination rules.

While it is permissible for plans to use substantive eligibility conditions, to impose an orientation period, or to require a new waiting period for rehired employees, it may raise issues – and future penalties. Always check with your legal counsel on adherence to the regulations.

Nondiscrimination rules matter, too. For example, a plan can’t have eligibility rules for lower paid employees or protected classes that are less generous than those for other employees.

How can we help?
ADPIA can assist you with assessing your current plan to see if it meets with all necessary rules and regulations, including those related to waiting and orientation periods.

Automatic Data Processing Insurance Agency, Inc.