Notice 2012-59 provides guidance on the requirement under Section 2708 of the Public Health Service Act (added by PPACA) that a group health plan not apply any waiting period that exceeds 90 days. The rule applies for plan years beginning on or after January 1, 2014.
Among the clarifications offered by the guidance:
- Definition of Waiting Period. A "waiting period" is defined as a period of time that must pass before coverage can become effective for an individual who is otherwise eligible to enroll under a plan. Eligibility conditions based solely on the lapse of time cannot exceed 90 days, but other eligibility conditions (e.g., working full time or working in a covered job classification) are permissible, even if they have the effect of excluding an individual from coverage under the plan for more than 90 days.
- Determining Full-Time Status for Variable-Hour Employees. If a plan limits coverage to full-time employees, it may take a reasonable period of time to determine whether a newly hired employee meets the full-time standard, if it is not clear on the date of hire that the employee will work the required number of hours (e.g., 30 hours per week). In general, this determination must be made within a year after the employee is hired, and if the employee satisfies the eligibility requirements, coverage must be offered beginning within 13 months after the date of hire. Otherwise, the plan may be treated as indirectly avoiding the 90-day-waiting-period requirement.
This notice was issued in connection with a detailed notice describing methods for determining whether employees are full-time employees for purposes of the play-or-pay penalties. These two pieces of guidance will be critical for employers that want to structure their eligibility provisions to both comply with the 90-day limitation on waiting periods and avoid application of the play-or-pay penalties.