The Affordable Care Act (ACA) prohibits group health plans and health insurance issuers from applying a waiting period that exceeds 90 calendar days for otherwise eligible employees and their dependents to enroll in coverage. A waiting period is the period that must pass before coverage for an eligible employee (and their dependent[s]) can become effective.
90-Day Maximum Rule
- Waiting periods cannot exceed 90 calendar days, which is not the same as three months.
- Coverage must be effective no later than the 91st day.
- Employers may impose reasonable eligibility conditions (e.g., minimum hours worked), but these cannot be designed to avoid the 90-day limit.
Common Employer Approaches
- Most employers use one of the following structures to comply with the 90-day rule:
- First of the month following date of hire
- First of the month following 30 days (one month)
- First of the month following 60 days (two months)
- These timelines ensure that coverage can begin, if elected by the employee, no later than the 90th day.
Variable-Hour Employees
- Applicable Large Employers (ALEs) may use a measurement period of up to 12 months to determine full-time status for variable-hour employees under the employer mandate rules.
- This measurement period occurs before the waiting period and does not count toward the 90 days.