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Employment-Based Orientation Periods Cannot Exceed One Month for Purposes of ACA 90-Day Waiting Period Limit

July 29, 2014 at 2:59 pm

Employment-Based Orientation Periods Cannot Exceed One Month for Purposes of ACA 90-Day Waiting Period Limit

Under the Affordable Care Act (ACA), eligibility conditions for group health plan coverage that are based solely on the lapse of a time period are permissible for no more than 90 days. Other conditions for eligibility are generally allowed, including a requirement that employees successfully complete a reasonable and bona fide employment-based orientation period.

Rules for Orientation Periods
Consistent with prior guidance, final rules provide that group health plans will be considered in compliance with the law if the employment-based orientation period does not exceed one month and the maximum 90-day waiting period begins on the first day after the orientation period.

One month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage or, if there is not a corresponding date in the next calendar month, the last day of the next calendar month. (For example, if an employee’s start date is May 3, the last permitted day of the orientation period is June 2; if the employee’s start date is August 31, the last permitted day of the orientation period is September 30.)

Effect on “Pay or Play” Requirements
Employers subject to the ACA’s “pay or play” requirements (generally those with at least 50 full-time employees, including full-time equivalent employees) should note that compliance with the 90-day limit and maximum orientation period rules is not determinative of compliance with “pay or play.” Such employers may not be able to impose the full one-month orientation period and the full 90-day waiting period without potentially becoming subject to a “pay or play” penalty.

Information on other requirements related to Health Care Reform is available in our ACA Summary by Year and Company Size.

Article Provided by HR 360, Inc.

Categories: Group Benefit Administration.

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