Agencies Propose Strict 90-Day Waiting Period
NEW PPACA DETAILS
Eligibility Waiting Periods l Employee Notices l
The Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) continue to issue details on the Patient Protection and Affordable Care Act (PPACA). The past 10 days has brought several changes of interest to employers:
Eligibility Waiting Periods
Affects all plans, whether fully insured, self-funded or grandfathered. Applies to all sizes of employers, as of the start of the 2014 plan year
The agencies have issued proposed regulations that state that an eligibility waiting period cannot be more than 90 days. This literally is 90 calendar days -- a plan that begins coverage as of the first of the month after 90 days of employment, or after three months of employment, will be out of compliance. If the 91st day falls on a weekend or holiday, the plan may not wait to begin coverage until the following work day -- in that situation, the plan will need to begin coverage as of the Friday before the end of the allowed waiting period.
Example: Sam starts work on July 14, 2014. His coverage must begin on or before Oct. 13, 2014. If Sam's employer is closed that day for Columbus Day and it cannot begin coverage because of the closure, his coverage must begin Friday Oct. 10.
The waiting period may be delayed until the employee meets the plan's eligibility requirements -- for example, if the plan does not cover employees who work fewer than 30 hours per week or employees in certain job categories, and an employee moves from ineligible to eligible status, the waiting period may begin as of the date the employee first moves into the eligible class. The agencies regard earnings and residual requirements under multiemployer plans as permitted types of eligibility requirements.
The proposed regulations confirm that a waiting period that is longer than 90 days is allowed for new variable hours employees while they complete their initial measurement period. The waiting period may be imposed after the measurement period is completed as long as both are completed by the first day of the month following completion of 13 months of employment.
Example: Ann is a variable hours employee because she is an on-call nurse. Ann's employer uses a 12-month initial measurement period for variable hours employees and a 60-day waiting period. Ann is hired May 10, 2014. If Ann averages 30 or more hours per week during the initial measurement period, she must be offered coverage with an effective date of July 1, 2015 or sooner.
Plans that require a certain number of hours be completed to be eligible will be allowed to use an hours of service requirement of up to 1,200 hours. A waiting period of up to 90 days may follow completion of the hours of service requirement. Plans that allow employees to buy or bank hours will be permitted.
Individuals who are part way through a waiting period as of the start of the 2014 plan year must be credited with time prior to 2014, so that their total waiting period is no more than 90 days.
Example: Ed is hired Oct. 22, 2013 to work part-time. Ed's employer has a calendar year plan and during 2013 it used a 6 month waiting period. Ed must be offered coverage with an effective date on or before Jan. 21, 2014, because that is Ed's 91st day of employment. (It does not matter that Ed works part-time -- the waiting period limit applies to both part-time and full-time employees.)
Certificates of Creditable Coverage
Affects all plans, whether fully insured, self-funded or grandfathered, and regardless of employer size, as of Jan. 1, 2015
Because pre-existing condition limitations will not be permitted after the start of the 2014 plan year, certificates of creditable coverage would not need to be provided after Dec. 31, 2014. (This date would apply regardless of plan year.)
The notice regarding pre-existing condition limitations that is provided as part of open enrollment also will become obsolete.
External Claims Appeals Requirement
Applies to all nongrandfathered plans, whether fully insured or self-funded, and to all sizes of employers
PPACA requires all nongrandfathered plans to follow detailed processes for claims appeals, including a process for external review that includes 16 consumer protections required under the NAIC model act. Due to practical difficulties meeting these requirements, interim rules were issued that only required these reviews to meet some of the consumer protections. The interim rules have now been extended, giving insurers and self-funded plans until Jan. 1, 2016 to meet the full external review requirements.
The proposed rule on eligibility waiting periods and certificates of creditable coverage is here:
Eligibility Waiting Periods - Proposed Rule
The notice extending the transition period for the external review process is here:
Technical Release No. 2013-01