How long, after hiring or re-hiring an otherwise eligible employee, may an employer delay that employee’s group health plan enrollment?  The ACA’s answer is “90 days.”  On February 24, the DOL, HHS and IRS jointly published matching sets of final rules describing that 90-day waiting period.   They substantially track the proposed rules of March 2013 and are compatible with the just-issued employer mandate final rules.

Noting that most group health plans have shorter waiting periods already, the agencies neverthless took seriously comments by those with plans that would be disrupted by strict application of the statute (42 U.S.C. § 300gg-7) and found ways to cut them significant slack.  They also announced a separate, but related set of new rules for “special enrollees.”  To keep this short and simple, we’ll deal with those another day.

Boiling it way down, if a new hire may elect coverage that becomes effective on a date not later than 90 days thereafter, counting weekends and holidays, then the plan complies, without needing to use any exception, even if the new employee drags his feet and so delays the start of coverage.  The same principle governs an employee who is not in an eligible category upon hiring, but moves into an eligible category afterwards.

A plan may interpose eligibility criteria (not designed to evade the waiting period) that include minimum service hours (capped at 1,200), training and certification requirements.  If so, the waiting period begins when those criteria are satisfied.  And, the agncies have finalized their adoption of the “look-back measurement” rules for newly-hired, variable hour employees found in the IRS employer mandate final rules. All that is good news, but it’s not new news.

Here’s what’s new in the final rules.  A plan also may interpose an “orientation” period of up to one month. So, for example, if a plan now effects coverage on the first day of the month that begins following 90 days of employment – in violation of the 90-day rule, strictly speaking – it may continue essentially the same practice and yet avoid a waiting period violation by inserting the newly-approved orientation period following the hire date.  That allows the plan to have one “90-day” period that satisifes both with the waiting period rules and the employer mandate rules. 

But there’s just enough of a catch so that the agencies had to issue a separate set of proposed rules regarding this new orientation period.   The clearest, most practical definition of this extra “month” is in the rules’ preamble, which we’ll quote.

Under these proposed regulations, 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. For example, if an employee’s start date in an otherwise eligible position is May 3, the last permitted day of the orientation period is June 2. Similarly, if an employee’s start date in an otherwise eligible position is October 1, the last permitted day of the orientation period is October 31. If there is not a corresponding date in the next calendar month upon adding a calendar month, the last permitted day of the orientation period is the last day of the next calendar month. For example, if the employee’s start date is January 30, the last permitted day of the orientation period is February 28 (or February 29 in a leap year). Similarly, if the employee’s start date is August 31, the last permitted day of the orientation period is September 30. If a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

An example in the actual rule references a hypothetical group health plan, “under which full-time employees are eligible for coverage after they have successfully completed a one-month orientation period.”   This strongly suggests to us that completion of the orientation period must be an express, substantive plan eligibility provision.

Here’s what we make of all this.  Forced to choose between the more administratively practical provisions of the employer mandate final rules and strict application of the 90-day rule in the statute, the regulators preferred practicality.  Harrumph, harrumph.