Did you know that under federal law, employers offering health insurance to their employees cannot make them wait longer than 90 days for coverage to start? Many assume this rule has been around for decades, but it dates back to the 2014 final regulations implementing the Affordable Care Act (ACA), not the ACA itself, which was signed into law in 2010.
Those regulations state that once an employee becomes eligible for an employer’s health plan, the waiting period may not exceed 90 days. To be clear, this is not a requirement for employers to offer health insurance. Instead, it sets the maximum amount of time an employee has to wait before becoming eligible for coverage once an employer chooses to offer it.
Key takeaways
- The Affordable Care Act (ACA) requires that employers who offer health insurance must provide access to eligible employees within a maximum 90-day waiting period
- Employers have the flexibility to waive or shorten the 90-day window, which can help small businesses attract talent and simplify the onboarding process for new hires
- A probationary period counts toward the total 90-day limit, meaning employers cannot restart the waiting period after a trial phase has concluded
- The 90-day limit refers to consecutive calendar days — including weekends and holidays — and coverage must begin no later than the 91st day
The details of the waiting period can raise questions. For example, employers may wonder whether different classes of employees can have different waiting periods (they can), whether it makes sense to offer coverage before the 90-day mark, or why the rule exists in the first place.
In this guide, we’ll define the 90-day waiting period, explain why it matters for employers, and cover how to stay compliant when offering a health insurance plan.
Probationary period insurance: What is the 90-day waiting period exactly?
The 90-day waiting period is the maximum amount of time an eligible employee has to wait before enrolling in a company-sponsored health insurance plan. Once that period ends, employees must be allowed to enroll in coverage. “The longest waiting period you can have for your group medical plan is 90 days,” says Paul Foery, OnPay’s former Vice President of Insurance, who has over 30 years of experience assisting small businesses with questions related to insurance and benefits. “And it’s a federal law tied to the Affordable Care Act.”
Employers use a waiting period for a couple of reasons. First, it reduces administrative costs and paperwork by avoiding enrollment for employees who leave shortly after being hired. It can also lower overall costs of providing health insurance benefits, since some insurance companies offer better rates when fewer short-tenured employees cycle through the plan.
That said, companies don’t have to wait the full 90 days to enroll new hires. If a company chooses to, employees can become eligible for coverage as early as their first day on the job or at any point up to the 90-day mark. The one rule employers can’t break is the waiting period can’t exceed 90 days. The purpose of the limit is to prevent workers from waiting too long to access health coverage.
Should employers wait the full 90 days?
In most cases, employers waive the waiting period when a group first sets up a plan. This gives new hires one less thing to worry about, especially if they have dependents relying on that coverage, and it can make an employer more attractive to job seekers. Some employers waive the waiting period to avoid the perception of a double standard or an awkward situation among employees.
As part of the application process when setting up a plan, your broker asks about coverage for employees already on the payroll. For a new plan, they need to know:
- Are you enrolling any existing full-time employees?
- Will you invoke the 90-day waiting period, or will it be 30, 60, or another window as long as it doesn’t exceed 90 days?
This could be something to keep in mind for companies with plans to scale.
“It can be a good idea to think about the future and how your team will grow. Setting the waiting period to the maximum window of 90 days can make it a bit harder to attract talent. People you’re interviewing who may be considering other offers could go to an employer that is not as rigid.”
— Paul Foery, former Vice President of Insurance at OnPay
Next, let’s look at why employers should understand the waiting period and its potential impact on their organization.
Why understanding the 90-day health insurance waiting period is important for employers
It can be helpful for employers to understand the Affordable Care Act’s 90-day waiting period for a variety of reasons.
Compliance considerations
Knowing and following the rule helps companies stay compliant with the ACA. As mentioned earlier, employers who offer group health insurance plans must give eligible employees access within their first 90 days on the job. If that window stretches past 90 days, the employer has technically broken the rule.
Keeps employees in the know
When employees understand how eligibility works and how long they’ll wait, there’s no guesswork about when coverage kicks in. Health insurance is often one of the benefits that drew a new hire to the job in the first place. Our research shows access to health insurance is a top perk on employees’ minds, so setting clear expectations, whether an employee waits one day or 90, can put their minds at ease.
Prevent litigation
In some cases, should an employee end up contracting a serious illness (but never be provided the option to enroll in a health plan during the first 90 days on the job), they could bring legal action against an employer and potentially sue for damages to cover medical costs.
“Though rare, an employee can sue the employer for not processing an application,” Foery explains. “So, it is important to have a handle on how the waiting period works and ensure employees are given the option to enroll (or refuse) coverage and have it in writing.”
Did you know?
The 90-day waiting period limitation applies to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. Grandfathered plans are exempt from the ACA’s waiting period rules.
Can employees have different health insurance waiting periods?
Yes, employers can assign different waiting periods to different classes of employees, as long as they establish each class fairly and don’t create unlawful discrimination within the benefit plan.
Whether this makes sense typically depends on the group size. For example:
Small group (Roughly 100 or fewer employees)
- Less flexibility
- Generally, one waiting period applies to all employees
Large group (100 or more employees)
- More flexibility to set up different employee classes with different waiting periods (within reason)
- For example, employers can apply one waiting period to managers and another to hourly workers
- Once you set up classes, you must apply them consistently.
Understanding the 90-day limit in different scenarios
Here’s a quick look at how the waiting period applies to common hiring situations.
| Situation | Does the 90-day limit apply? | Keep in mind |
| New full-time hire | Yes | Coverage must begin no later than the 91st day of employment |
| Rehire (after 13+ week break) | Yes | You can treat them as a new employee and start a new 90-day waiting period |
| Rehire (less than 13-week break) | No | Generally considered a “continuing employee”; coverage usually begins immediately upon rehire |
| Part-time to full-time move | Yes | The 90-day clock typically starts the day the employee becomes eligible for benefits |
| Orientation period | Yes | A “bona fide” orientation period of up to 1 month is allowed before the 90-day clock begins |
Any differences in waiting periods must be justified and can’t be based on factors like race, gender, or age.
Do state laws affect the waiting period?
The 90-day limit is a federal maximum, but states are allowed to set stricter rules. For example, California used to enforce a stricter 60-day limit. However, a 2014 state law repealed it to align with the ACA’s 90-day maximum.
State laws can change, so employers with out-of-state employees should check state requirements in addition to the federal rule. State law takes precedence when it’s more restrictive than the ACA baseline.
Does the 90-day rule apply to disability and life insurance?
The ACA’s 90-day limit applies to group health insurance. Disability and life insurance benefits typically have their own waiting periods.
Disability insurance typically doesn’t have a waiting period for enrollment. Instead, it has an “elimination period,” which is the stretch of time after an employee becomes disabled before benefit payments begin. Short-term disability insurance periods may be anywhere from a few days to a few weeks, while the long-term disability elimination period may be 90 days or more.
Life insurance policies may have a death benefit waiting period after the policy goes into effect. The waiting period may be one or two years. If the insured dies during this period, the insurance company usually refunds the premiums paid (plus interest) but doesn’t pay the full death benefit.
This waiting period prevents people who are terminally ill from buying life insurance and then immediately claiming a large payout for their beneficiaries.
When is an employee eligible for benefits? When they are both a W-2 employee and full-time (meaning that they work 30 hours or more during a week).
— Paul Foery, former Vice President of Insurance at OnPay
How do employers communicate the waiting period to employees?
Here are a few ways to keep employees informed about your company’s waiting period policy.
Probationary period
Some employers use a “probationary” period when bringing on a new hire. This can be a trial period, during which both the employer and the employee gauge whether the working relationship is a good fit. These typically last 30, 60, or 90 days.
The probationary period counts toward the health insurance waiting period. Employers cannot run a separate probationary period to evaluate performance and then start the benefits waiting period afterward. The clock on the waiting period begins on the employee’s first day on the job.
Simple syncing
Most cloud-based payroll platforms can accurately calculate employee healthcare deductions and related taxes, which keeps payroll questions to a minimum.
What can employees do for coverage during the waiting period?
Employees don’t have to go without coverage while they wait out the 90-day period. Here are a few options:
- COBRA continuation coverage. If an employee is coming from a previous job that offered group health insurance, Consolidated Omnibus Budget Reconciliation Act (COBRA) lets them temporarily continue on their former employer’s plan, typically at their own expense, for anywhere from 18 to 36 months while they wait for new coverage to begin.
- ACA Marketplace plans. Starting a new job or losing coverage under a previous plan qualifies as a special enrollment event, which allows employees to shop for a plan on the ACA Marketplace outside the normal open enrollment period.
- Short-term health plans. Some employees opt for short-term, limited-duration insurance to bridge the gap. These plans are usually cheaper than COBRA or ACA-compliant plans available on the marketplace, but they offer less comprehensive coverage. Employees should fully understand the tradeoffs before enrolling.
Does a 90-day waiting period equal three months?
According to the ACA, 90 days means exactly that: 90 consecutive calendar days, not three months. Weekends and holidays count toward the total.
For example, if an employee starts the week of Thanksgiving and has that Thursday and Friday off because the company is closed for the holiday, those days still count toward the 90-day block. The office being closed doesn’t pause the clock.
Keep in mind
If an employee’s 91st day happens to fall on a weekend or holiday, coverage must still be in effect by that date. Employers can’t push the start date later just because it isn’t a formal business day.
Take a closer look at the 90-day waiting period
One way for a company to attract and retain a talented workforce is to offer access to health insurance. Understanding the 90-day waiting period helps employers stay ahead of ACA regulations and set clear expectations with their workforce regarding coverage eligibility.
It also goes a long way toward building goodwill with employees and creating a transparent work environment that supports productivity and retention. If you have questions about setting up a health plan, or what it involves, our team is here to help.
