90-Day Waiting Period in Health Plan Can be Extended by Orientation Period
Effective for the 2014 plan year, no group health plan can make an individual who is otherwise eligible to enroll wait longer than 90 days to enroll in the plan. This rule applies to all group health plans regardless of size and wasn’t delayed with the employer mandate. The rule doesn’t require employers to provide coverage, but provides if you do provide coverage to a group of employees, you can’t have a waiting period longer than 90 days.
One exception to this rule is that employers that have an orientation period may begin the 90-day clock after the orientation period. Before you get too excited that you can use this exception to stretch your health plan’s waiting period, the final regulations provide that the orientation period can be no longer than a month. For example, if an employee begins employment on June 26, the last permitted day of the orientation period is July 25 and the 90-day clock would begin running at that time. The orientation period must also be “bona fide” and not just based on the passage of time. If you wish to rely on an orientation period, you should take steps to ensure it will be seen as bona fide. For example, have an employee evaluation process in the first month and update handbooks and related documents to explain the orientation period. Just saying that you have an orientation period likely won’t be enough to satisfy the IRS if your plan is audited.