Final Regulations Issued on 90-Day Waiting Period Maximum
Last week, the final rule prohibiting waiting periods in excess of 90 days was issued by the Department of Labor, Treasury Department, and Health and Human Services; the three agencies responsible for writing the regulations. The final rules are much the same as the previously issued proposed regulations. Also, included in the final regulations were amendments to the Health Insurance Affordability and Accountability Act (HIPAA) to bring them into compliance with the Affordable Care Act (ACA) regulations. Specifically, since plans will no longer be able to impose pre-existing condition exclusions on
individuals, insurers and plan sponsors will no longer be required to provide Certificates of Creditable Coverage beginning January 1, 2015.
The prohibition against waiting periods in excess of 90 days applies to all employers, large and small, that offer health coverage to full-time employees....
individuals, insurers and plan sponsors will no longer be required to provide Certificates of Creditable Coverage beginning January 1, 2015.
The prohibition against waiting periods in excess of 90 days applies to all employers, large and small, that offer health coverage to full-time employees....
Employers offering coverage may not require an employee to wait more than 90 days before coverage begins. Most employer plans provide coverage on the first of the month following the waiting period (no mid-month effective dates) as is the case with Discovery Outsourcing’s health plans. In order for employers to comply, the maximum waiting period they can establish will be 60 days, with coverage effective the first of the month following the 60 days. This requirement will go into effect for participating Discovery clients beginning with the renewal of Discovery’s health plans on November 1, 2014.
Limited exceptions do apply, such as achieving a job-related licensure status, or other non-time-based requirements. Also, "variable hour employees" (employees who are hired as part-time but may turn out to be full-time) have certain measurement period rules an employer must follow in order to determine the employee’s eligibility.
Discovery Outsourcing will work with all clients during open enrollment this year to ensure the appropriate waiting period is in force. The fines for failure to comply are significant: $100 per employee per day. If the violation is determined to be more than "de minimis", the minimum excise tax for a compliance failure is $2,500 up to $15,000. No maximum cap
exists for intentional failures.
Proposed Regulations Issued on Orientation Periods
The agencies also released proposed regulations relating to "orientation periods". An employer would be permitted to allow a one-month orientation period prior to the start of a waiting period. This period would be established for
circumstances where there is a need to verify that an individual has the qualifications, licensing, or other standard that is required in order for them to perform the job. However, the preamble to the regulations indicates that
orientation periods are used infrequently. We will provide our clients with updates as we learn more about these orientation periods and how they can and cannot be used.
Dependent Coverage and the Employer Mandate
The recently issued final regulations related to the employer mandate provide that large employers must offer minimum essential coverage to full-time employees and their dependent children in order to avoid paying penalties. Unlike employee coverage, the coverage for dependents must meet minimum essential coverage requirements but they do not have to meet the affordability rule. As in the proposed regulations, the final regulations do not require employers to offer coverage to employees’ spouses.
The final regulations clarify that dependent coverage must be continued through the end of the month in which the child turns age 26. Also, under the original proposed rules, a dependent child included stepchildren and foster children. Commenters on the proposed rules requested that foster children and stepchildren be excluded from the definition. The final regulations do not require that coverage be extended to foster children or stepchildren.
If you have questions about this bulletin or other health care reform topics, please contact Anthony Quinn, Director of Benefits, at 303-225-0400 or [email protected].
Pursuant to IRS Circular 230 - This publication is distributed
with the understanding that the author(s), publisher and distributor are not
rendering tax, accounting, legal or other professional advice or opinions on
specific facts or matters, as each circumstance is unique. As required by U.S.
Treasury rules, we inform you that, unless expressly stated otherwise, any U.S.
federal tax advice contained herein is not intended or written to be used, and
cannot be used, by any person for the purpose of avoiding any penalties that may
be imposed by the Internal Revenue Service.
PLEASE CONTACT DISCOVERY FOR MORE
INFORMATION - www.discoveryoutsourcing.com
Limited exceptions do apply, such as achieving a job-related licensure status, or other non-time-based requirements. Also, "variable hour employees" (employees who are hired as part-time but may turn out to be full-time) have certain measurement period rules an employer must follow in order to determine the employee’s eligibility.
Discovery Outsourcing will work with all clients during open enrollment this year to ensure the appropriate waiting period is in force. The fines for failure to comply are significant: $100 per employee per day. If the violation is determined to be more than "de minimis", the minimum excise tax for a compliance failure is $2,500 up to $15,000. No maximum cap
exists for intentional failures.
Proposed Regulations Issued on Orientation Periods
The agencies also released proposed regulations relating to "orientation periods". An employer would be permitted to allow a one-month orientation period prior to the start of a waiting period. This period would be established for
circumstances where there is a need to verify that an individual has the qualifications, licensing, or other standard that is required in order for them to perform the job. However, the preamble to the regulations indicates that
orientation periods are used infrequently. We will provide our clients with updates as we learn more about these orientation periods and how they can and cannot be used.
Dependent Coverage and the Employer Mandate
The recently issued final regulations related to the employer mandate provide that large employers must offer minimum essential coverage to full-time employees and their dependent children in order to avoid paying penalties. Unlike employee coverage, the coverage for dependents must meet minimum essential coverage requirements but they do not have to meet the affordability rule. As in the proposed regulations, the final regulations do not require employers to offer coverage to employees’ spouses.
The final regulations clarify that dependent coverage must be continued through the end of the month in which the child turns age 26. Also, under the original proposed rules, a dependent child included stepchildren and foster children. Commenters on the proposed rules requested that foster children and stepchildren be excluded from the definition. The final regulations do not require that coverage be extended to foster children or stepchildren.
If you have questions about this bulletin or other health care reform topics, please contact Anthony Quinn, Director of Benefits, at 303-225-0400 or [email protected].
Pursuant to IRS Circular 230 - This publication is distributed
with the understanding that the author(s), publisher and distributor are not
rendering tax, accounting, legal or other professional advice or opinions on
specific facts or matters, as each circumstance is unique. As required by U.S.
Treasury rules, we inform you that, unless expressly stated otherwise, any U.S.
federal tax advice contained herein is not intended or written to be used, and
cannot be used, by any person for the purpose of avoiding any penalties that may
be imposed by the Internal Revenue Service.
PLEASE CONTACT DISCOVERY FOR MORE
INFORMATION - www.discoveryoutsourcing.com