RECENT REGULATIONS GIVE AN EMPLOYER TWO WAYS TO MINIMIZE THE IMPACT OF THE 90-DAY LIMIT ON WAITING PERIODS

Obamacare prohibits an employer from imposing a waiting period of more than 90 days before an otherwise eligible full-time employee can begin participating in the employer's health plan. Recent regulations, however, create two safe harbors that an employer, particularly an employer with high turnover, may wish to consider.

Regulations issued in February (26 CFR § 54.9815-2708(c)(3)(ii)) allow a health plan to impose up to a 1,200 hour of service requirement before starting the waiting period.  The employer would need to track the hours precisely and start the waiting period on the first day after the employee completes the 1,200 hour of service requirement.

Regulations issued in June (26 CFR § 54. 9815-2708(c)(3)(iii)) allow an employer to impose an orientation period of not more than one month minus one day before the waiting period begins. The orientation period must begin on the employee's start date.

An employer should consult with legal counsel to make sure that these or other methods for minimizing the impact of the 90-day limit on waiting periods do not create legal problems. For example, large employers may find that adopting either method would result in employer taxes.