Affordable Care Act Employee Coverage Offers: Waiting Periods

Healthcare Training Resource
March 12, 2014 — 1,480 views  
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The Affordable Car Act includes a three-month delay in coverage offers which is permitted as part of rules for employer responsibility. However, the Act’s rules also ban waiting periods of over 90 days. There are two methods to decide if an employee is a full-time hire: one is the measurement process that is a monthly one, and the other is a method that involves a look back. Both these methods allow employers to delay health plan coverage offers for three months without exposing them to penalties in tax.

Looking back

When one considers the measurement process that involves looking back at a past timeframe, coverage for some newly hired employees can actually be delayed for as long as 13 months from the date of joining, if that date is not Day One of a month. However, complying with rules for shared responsibilities of employers does not automatically mean that the prohibition on over 90-day waiting periods will be complied with. The final rules that implement the 90-day waiting period requirement clearly state that 90 continuous days is the standard. Regulators, on their part, said they would not implement a rule where three months are deemed as the equivalent of 90 days.

On the issue of co-ordinating with the measurement procedure that involves looking back at a certain timeframe in the past, both plans and employers did well. The 90-day waiting term rule and the look back method were aligned. The day when coverage should be given as part of employer responsibility rules is also the day when coverage should be given under the 90-day waiting rule. As part of the method of looking back, the employer takes into account hours credited during a prior period to find out an employee’s status, whether part time or full time, and then considers this measure for the next 12 months.

What are shared responsibility needs?

The shared employer rules don’t come into play if it is a small business; employers who have more than 50 full-time hires have a shared responsibility clause, which will come into play from January next year. Full-time staff involves those who work 30 or more hours every week, while part-time staff work less than that. According to the Obama administration, the final rules say that it is allowed for employees to be required to complete a specific hour count before they are eligible for coverage, as long as the ceiling is 1200 hours.

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