As we are all aware, the administration is still grappling with the implementation of the Affordable Care Act (ACA). So, employers now have one more development to understand and implement.
I refer to the final rule under the ACA, which requires employers to provide health insurance to new hires within 90 days of their eligibility. In other words, the waiting period for providing group health insurance coverage is limited to a 90 day period once the employee is deemed “eligible for coverage”. The 90-day waiting period includes all calendar days from the date of enrollment, including weekends and holidays.
While this new rule seems fairly straight-forward, nothing with the ACA is as simple as it initially appears to be. The rule specifies treatment of employees with breaks in service, individuals covered under a multiemployer agreement, and handling of orientation periods. It also sets forth the extent to which a health insurer may rely on the eligibility information provided by an employer.
What Makes a New Employee Eligible?
The new rule stipulates that once an employee is eligible for healthcare benefits, the waiting period cannot exceed 90 days. While the rule does not define conditions for eligibility, it does state the following:
In a separate rule, the length of an orientation period was specified. An employer to set a reasonable and bona fide “orientation period”- a time in which the employer and the employee are both evaluating the position and it is not possible to determine if the employee will be working full time. The rule stipulates that orientation periods cannot exceed one month.
The one month orientation would be arrived at by adding one calendar month and subtracting a day from it.
The regulations permit the operation of a multi-employer plan, under a collective bargaining agreement, with eligibility provisions specifying that employees can fulfil working hour requirements across multiple contributing employers. These plans often aggregate hours by calendar quarter and then permit coverage to extend for the next full calendar quarter, regardless of whether an employee has terminated employment.
Effective date for these regulations is Jan.1, 2015 and the reliance period extends through the end of 2014.
We can anticipate that staffing agencies will be seeking further clarification regarding these rules. Are their workers considered “former employees” when completing a client engagement and then starting a new engagement with a slight gap in between? Will some agencies attempt to offer healthcare benefits under a multi-employer plan? When considering engagements, contract workers will want to understand the coverage implications, and suppliers should seek clarification on these issues to avoid unintended non-compliance.
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