Waiting Period/Eligibility Requirements

Under the Patient Protection and Affordable Care Act and related legislation, plans may not impose a waiting period longer than 90 days. Other common time limits are:

• no waiting period; eligibility is immediate upon hire as a full-time employee
• 30 days of full-time employment

Which period should you choose? There are several factors that come into play in making your decision which eligibility period to choose. They are:

• Normal workforce turnover. If you have a high rate of employee turnover during the first three months, you might want to choose 90 days as the eligibility requirement; if you choose no waiting period, your administrative costs could be inordinately high.
• Competitive pressure. If you have to compete with other companies in your area for employees, you may end up at a competitive disadvantage if you require a longer waiting period than your competitors.
• Employees covered. Usually, only full-time employees are covered; if you want to cover part-time employees, you should establish an eligibility period based on a minimum number of hours per week or per year to remain enrolled.
• Price. It may impact your premium cost to go with a longer waiting period rather than a shorter one. Short periods can mean additional cost.

Should you have age limits? Some employers place maximum and minimum age limits on health plan eligibility in order to keep costs down. This decision may well be driven by your health insurance company. Talk to them about whether they use maximums or minimums.

As for the minimum age, there are no laws telling you what you have to do. Many employers don't have a minimum age; many of those that do choose age 18.

Age maximums are a little trickier. Generally, an employer that places age maximums on employees runs the risk of violating the age discrimination laws. Of course, if you have fewer than 20 employees, the federal age discrimination laws do not apply to you (although state antidiscrimination laws might). As a consequence, if you have fewer than 20 employees, you may not have to offer employees who work past age 65 coverage on the same basis as other employees.

Age maximums are much more common in the area of employees' dependents. However, under the Patient Protection and Affordable Care Act and related legislation, if your plan covers children you are prohibited from dropping children from their parents' insurance plans before the age of 26. There is a temporary exception for grandfathered group plans until 2014 if the young adult is eligible for group coverage outside his or her parents' plan.

For more information on the Affordable Care Act and eligibility requirements, visit the government's website.

Many health plans do require that those employees eligible for Medicare (i.e., age 65 or over) must take advantage of it.