Note, however, that California has still not officially repealed its 60-day limit on waiting periods for fully insured health plans in the state. That repeal seems to be headed for likely passage before the end of 2014.
On Friday afternoon, June 20th, the U.S. Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) released final regulations clarifying the maximum allowed length of any reasonable and bona fide employment-based orientation period under the Affordable Care Act (ACA).
During an orientation period, the Departments envision an employer and employee evaluate whether each party is satisfied with an employment situation, and then begin a standard orientation and training process. Final regulations provide that one month is the maximum allowed length of a reasonable and bona fide employment-based orientation period. Under these final 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.
Determining whether an orientation period is "reasonable" and "bona fide" should be a facts and circumstances analysis.
For any period longer than one month that precedes a waiting period, the Departments refer back to the general rule, which provides that the 90-day period begins after an individual is otherwise eligible to enroll under the terms of a group health plan. While a plan may impose substantive eligibility criteria, such as requiring the worker to fit within an eligible job classification or to achieve job-related licensure requirements, it may not impose conditions that are mere subterfuges for the passage of time.
Example ... [from the published regulations].
(i) Facts. Employee H begins working full time for Employer Z on October 16. Z sponsors a group health plan, under which full time employees are eligible for coverage after they have successfully completed a bona fide one-month orientation period. H completes the orientation period on November 15.
(ii) Conclusion. In this Example 11, the orientation period is not considered a subterfuge for the passage of time and is not considered to be designed to avoid compliance with the 90-day waiting period limitation. Accordingly, plan coverage for H must begin no later than February 14, which is the 91st day after H completes the orientation period. (If the orientation period was longer than one month, it would be considered to be a subterfuge for the passage of time and designed to avoid compliance with the 90-day waiting period limitation. Accordingly it would violate the rules of this section.)
Effective: 60 days after publication in the Federal Register [anticipated publication date June 25, 2014], the final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.
