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The IRS has issued guidance on the 90-day waiting period limitation in Public Health Service Act Section 2708.

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New Guidance on 90-Day Waiting Period for Employer Health Coverage

  • 9/26/2012

New Guidance on 90-Day Waiting Period for Employer Health Coverage

The IRS has issued temporary guidance on the 90-day waiting period limitation in Public Health Service Act (PHS Act) Section 2708. Employers, plans, and issuers may rely on the guidance at least through the end of 2014.

Background

The Patient Protection and Affordable Care Act (PPACA) added PHS Act Sec. 2708. The new law, the IRS explained, does not require the employer to offer coverage to any particular employee or class of employees, including part-time employees. However, the new law prevents an otherwise eligible employee or dependent from having to wait more than 90 days before coverage becomes effective. Initial guidance was in Notice 2011-36, and clarified in Notice 2012-59.

Waiting period

A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. Eligibility conditions that are based solely on the lapse of a time period are permissible for no more than 90 days.

Hours

If a group health plan bases eligibility on a specified number of hours worked per period (or working full time), but the number of hours a newly hired employee will regularly work can not be determined, the plan may take a reasonable period of time to determine if the employee meets the plan’s eligibility condition.

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