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Gear up for new Obamacare waiting-period rules

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in Small Business Tax

Despite recent delays in enforcement of the health insurance mandate under “Obamacare”—officially titled the Patient Protection and Affordable Care Act (PPACA)—employers still must comply with other rules in the health insurance law.

Alert: The Treasury Department recently issued new final regulations on the 90-day ­waiting-period rule for employers. The new regs expand on earlier proposed regulations and clarify certain other issues.

Here’s a brief recap of some of the high points relating to the 90-day waiting period.

Under the PPACA, an employer’s health insurance plan can’t impose a waiting period of more than 90 calendar days before coverage is available to employees. This rule applies to new-hires and other employees who are first becoming eligible for health insurance coverage.

The 90-day waiting period applies to plans of all employers regardless of size. It also covers plans that are grandfathered under other provisions of Obamacare as well as self-insured plans.

This PPACA provision went into effect for plan years beginning in 2014 or after, but the final regulations technically apply to plan years beginning on Jan. 1, 2015, or after. For 2014, your firm may choose to rely on earlier proposed regulations or the new final regulations.

The new regs explain that an employer only has to offer coverage to all “otherwise employees” after 90 days. For example, part-timers may be excluded. Also, eligibility may be based on hours worked if the required time doesn’t exceed 1,200 hours. This is intended to be a one-time eligibility requirement.

Furthermore, the final regulations say that the 90-day waiting period includes all calendar days, including weekends and holidays. The period begins when “substantive eligibility conditions” are met, such as being in an eligible job class, meeting any licensing requirements detailed in the plan and satisfying a reasonable and bona fide orientation period.

If a former employee is rehired, the rehire may be treated as being newly eligible for coverage. Therefore, he or she may be required to meet the plan’s eligibility requirements and satisfy the 90-day waiting period.

What’s the penalty if an employer doesn’t observe the rules? Failure to comply with the 90-day waiting period for eligible employees could result in retroactive eligibility and premium payments to keep the plan in place.

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