Generally, waiting periods to enroll in health coverage cannot exceed 90 days, and eligibility conditions based solely on the lapse of a time period are permissible for no more than 90 days, under new final rules issued by the U.S. Departments of Labor Health and Human Services and the Treasury. In addition, the employer has to count all calendar days beginning on the enrollment date, including weekends and holidays. No group health plan or group health insurer may prevent an otherwise eligible employee from being made an offer in that time.
The rules also formally overwrite HIPAA’s 2004 rules on pre-existing condition exclusions, to implement health care reform‘s total ban on such exclusions that took effect for plan years starting Jan. 1, 2014. Most key, the rules finalized the elimination of the requirement to issue HIPAA certificates of creditable coverage, starting with plan years beginning on Dec. 21, 2014. The rules finalize other amendments to 2004 HIPAA regulations. However, plans and issuers are to still comply with the existing HIPAA rules until the new amendments become effective.
Both grandfathered and nongrandfathered group health plans and group health insurers must observe the final rules for plan years beginning on or after Jan. 1, 2015. Plan years with start dates later than that are still running out through to Dec. 30, 2014, the rule notes.
The final rules were put on public display on Feb. 20 and will be officially published on Feb. 24. They mainly affirm what was set out in proposed regulations on March 21, 2013 (78 Fed. Reg. 17313), which in term, implement a ban on waiting periods that exceed 90 days for individuals otherwise eligible to enroll in coverage because they have been the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements).
The rule allows a number coverage eligibility tests that are not based on the counting of days. It permits safe harbors to account for situations in which 90 days would be “too early to tell” whether a worker is eligible for an offer of insurance. Examples include “measurement periods” (during which a worker’s full-time status is not yet certain); “cumulative hours of service”; “orientation periods”; and “rehired employees.”
Safe Harbors
The rule establishes a series of safe harbors meeting eligibility criteria that can stretch the time before enrollment beyond 90 days. But the feds circumscribe each one to make sure that eligibility conditions that are based on achieving a work-related quota or other requirement are not used to evade the waiting period limit.
- Measurement periods may be used if an employer cannot reasonably determine whether the employee will work the amount of hours he or she needs to work full-time. A 12-month measurement period would be acceptable, but the offer of insurance will have to be made 30 days (not 90 days) after that for a grand total of 13 months maximum time from hiring to offer. For variable-hour workers, as long as coverage is offered no more than 90 days after a determination is made based on the measurement period, and the total “hire-to-offer” period is under 13 months, that period likely will comply. And if the employee’s start date is not the first day of a calendar month, the plan gets additional time remaining until the first day of the next calendar month.
- A cumulative hours-of-service requirement will not be considered as designed to skirt compliance with the 90-day time limit if it does not exceed 1,200 hours. On the day the cumulative service requirement is met the 90-day clock must start ticking.
Note: The cumulative requirement may not be used twice on the same employee. - Orientation periods. Requiring new hires to complete a reasonable and bona fide employment-based orientation period may be imposed as a condition for eligibility for coverage under a plan. But a separate proposed rule would limit the maximum duration of orientation periods to one month. And the agency is taking public comments on that aspect of the rule for 60 days after the rule is published in the Federal Register. The rules are slated to be published on Feb. 24.
- Rehired employees. Former employees who are rehired may be treated as newly eligible for coverage upon rehire and, the rule says, a plan or insurer may require that individual to meet the plan’s eligibility criteria and to satisfy the plan’s waiting period again. The same goes for workers who move to positions that are ineligible for coverage but then return to an eligible job.
- Collectively bargained agreements. CBAs’ special rules governing eligibility, such as “hour banks” — in which workers’ excess hours from one measurement period are credited against any shortage of hours in a succeeding measurement period, enabling workers to prevent lapses in coverage. These are allowed, provided the employer and insurer apprise each other about them.
- Multiemployer arrangements. In a September 2013 set of questions and answers, the example is given of a multiemployer plan operating under a CBA that has an eligibility provision allowing employees to become eligible for coverage by working hours of covered employment across multiple contributing employers. That would be considered acceptable because it accommodates a unique operating structure and is not an attempt to avoid compliance with the 90-day waiting limit, the rules state.
Late or Special Enrollees
If an individual enrolls as a late enrollee or special enrollee, any period before the late or special enrollment is not a waiting period. The effective date of coverage for special enrollees continues to be that in the 2004 HIPAA regulations governing special enrollment (and, if applicable, in HHS regulations addressing guaranteed availability.
Pre-existing Condition Examples
The final rule codifies examples in the proposed rules of exclusions that would be prohibited since they deny benefits in violation of health care reform’s prohibition on exclusions for pre-existing conditions. Under the final rules, these must all be covered now.
- An exclusion of benefits for any prosthesis if the body part was lost before the effective date of coverage.
- A plan provision excluding cosmetic surgery benefits for individuals injured before enrolling in the plan.
- The requirement to be covered under the plan for 12 months to be eligible for pregnancy benefits.
- The exclusion of coverage for treatment of congenital heart conditions.
- A group health plan provides coverage for the treatment of diabetes, generally not subject to any requirement to obtain an approval for a treatment plan. However, if an individual was diagnosed with diabetes before the effective date of coverage, diabetes coverage is subject to a requirement to obtain approval of a treatment plan in advance. This is prohibited.
- A group health plan provides coverage for three infertility treatments. The plan counts against the three-treatment limit benefits provided under prior health coverage.
See the final rule for the full list of examples. For more information on health care reform’s 90-day limit on offers of enrollment, see Section 430 of The New Health Care Reform Law: What Employers Need to Know. For details on HIPAA certification rules, see Tab 300 of the Employer’s Guide to HIPAA.