MAXIMUM 90 DAYS waiting period for
new employees to get on Group Health Plan

Group Health #Carriers
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"Official" Information

Employer Small Group Health Plans – Introduction

• Carriers – Companies Employer Group no index follow
  • Aetna Employer Group Plan Coverage
  • Blue Cross – Anthem – Employer Plans
    • Administrative, Renewal & Wellness Tools
  • Blue Shield – Employer Group
  • California Choice – Multiple Companies ONE Bill
  • Health Net
  • Kaiser Permanente – New Enrollment – Administrative
  • Oscar – CIGNA + Oscar
  • Sharp Health Plan
  • SHOP – Covered CA for Small Business
  • Sutter Employer Health Plans 2022
  •  UnitedHealthcare
    • Administration & Wellness

Background… of the maximum  90 rule

• There has been a lot of confusion regarding waiting periods due to the difference between the federal Affordable Care Act (ACA) requirement of 90 days and the California state requirement of 60 days (AB 1083).  Recently the Department of Managed Healthcare (DMHC) notified health plans regarding their  regulatory position on this issue.  The DMHC indicated (their website)  AB 1083 addresses the maximum waiting period permitted for California health plans.  ACA amended ERISA law so their 90 day maximum applies to employers. Therefore, an employer could select a waiting period of up to 90 days.  First of the month following 60 days is not compliant with AB 1083.
• This recent DMHC guidance resulted in changes to the waiting period options offered by some California health plans.  With all of the other health reform changes you have to remember we want to provide this quick reference chart.
  • Personally, I wish people would stop using the bill # and refer to the actual code.
• So, what is it, under CA Law & Health Care Reform, 60 or 90 day maximum waiting – probationary period for new employees?
• PPACA and CA regulations and law change DAILY!!!  
• Waiting periods required by California health plans can be no longer than 60 days. ^{Buck Consultants}    So, it can’t be 1st of month after 2 month probation period.^.  

Is the Employer liable to pay hospitalization & medical expenses if
he or HR department makes an error and employee doesn’t get enrolled?

There was a court case in 1962 called  Gediman v Anheuser Busch, Inc  that is said to have prompted the need for employee benefits liability insurance. In this Anheuser Busch  was held accountable to the estate of a former employee for providing incorrect information. Employee benefits liability coverage appeared on the market shortly after that case was decided.

Two of the typical exposures that would be considered an object of employee benefits liability coverage, when the employer, HR Department or Benefits Administrator does or doesn’t do:

(1) erroneously calculates the amount of pension program and an employee elects early retirement only to find out that the amount is considerably less; and

(2) forgets to enroll an employee for the company’s hospitalization program and the employee finds out about this omission following a serious illness  ^{Rough Notes.com} *

With all the rules on Open Enrollment, Late Enrollment, Special Enrollment, Section 125, Insurance Company rules, it’s very difficult to correct a mistake and enroll the employee right away to correct an error. Read this article from ABD Consultion for more detail & explanation.

If an employee doesn’t want coverage – get a signed WAIVER.  Here’s the enrollment forms, if there isn’t a separate waiver form, it’s generally included in the enrollment form.

Gediman v Anheuser Busch – Steve’s highlights  

The court head that the District Court erred in awarding judgment under the pension plan but that plaintiffs were entitled to recover on the basis that defendant negligently, although in good faith, misinformed Mr. Barsi as to the consequences of the election that he made upon retirement

negligent communication, or failure to communicate with clarity, may give rise to liability;

Communication gaffes: a root cause of malpractice claims

A Failure to Communicate: Clarity v. Offense

to anyone acquainted with pension plan terminology, this does not mean at all what plaintiffs say it meant– namely, that Barsi owned this money just as if it were in a savings account.

the pension consultants did not ‘exercise that care and competence in obtaining and communicating the information which its recipient is justified in expecting.’

Barsi could not have been expected to know this without being told.  Neither the Plan nor the employees’ booklet, so beautifully clear to the experienced draftsman, used the kind of language that is fully understandable by even an intelligent layman; perhaps it is just not possible to do so. When the action is on the contract, defendant may properly insist that the boundaries of its obligation are marked out by the technical terms used, whether Barsi understood them or not; but when Barsi sought advice and defendant gave this, it was bound to take account of the frailties of human understanding.  By his letter of August 31, 1956, Barsi placed himself in defendant’s hands. Defendant was not required to accept him; it could have suggested he consult his own advisers. Having undertaken to advise, defendant was bound to advise clearly. ‘It is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.’   Barsi had indicated that, acting on his own, he would choose the cash lump sum or the single premium annuity. If he was to be told that the lump sum could not be made available in the single payment that would permit capital gains treatment but that another course, a deferred cash distribution, would give this tax advantage, he should have been plainly warned that the risks incident to death, about which he had earlier been apprised with relation to the period prior to retirement, would continue until whatever date he picked for the distribution. Although we are sure everyone was acting in the best of faith, that needed statement was not forthcoming; instead, the memorandum made one of a dangerously lulling sort. 

Enforcement of Maximum 90 waiting period

PENALTY

The penalty for administering a waiting period in excess of the 90-day maximum is the standard penalty for noncompliance with all of the Public Health Services Act health care reform mandates. That penalty is an excise tax of $100 per day with respect to each individual to whom the failure relates. The tax is imposed on the plan sponsor of single employer plans.

If the failure is discovered after the plan receives notice of an audit, the minimum excise tax is $2,500. For a violation that is “more than de minimis,” the minimum penalty increases to $15,000. The maximum penalty for unintentional failures by a single employer plan is the lesser of 10% of the amount paid by the employer during the prior tax year for group health plans or $500,000.  ^{Willis.com * graydon.law * Leavitt.com} *

Resources & Links

• GUIDANCE ON 90-DAY WAITING PERIOD LIMITATION UNDER PUBLIC HEALTH SERVICE ACT § 2708 NOTICE 2012-59
• Guaranteed availability of coverage   45 CFR § 147.104 –
• Compliance Assistance Guide from DOL.Gov Health Benefits under Federal Law

Insurance Company Requirements to Offer Coverage to ALL employees

• Participation & Premium Contribution Requirements
  • Employer Group Association Plans – Trump’s Executive Order – CA prohibition
  • Management Carve Outs – §2716 – Similarly Situated
    • Common Ownership – Affiliated Companies – Corporations

Client Links & Resources

•  HN Bulletin ♦ HN Sept Bulletin
• Federal Register – Final Rules  – Orientation Period – with our annotations and highlights
• 2708 Public Health Service Act – HR 3590 PPACA Page 43

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• Late Enrollee – Triggers – Qualifying Events

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