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Updated: June 18, 2024

The 90-day waiting period for health insurance explained

Published By:

Jon Davis

More from our experts

Did you know that under federal law, employers who provide health insurance to their employees must do so within a 90-day waiting period? Some may think this rule has been around forever, but it is actually a part of the 2014 Affordable Care Act. The legislation says that when employees become eligible for an employer’s health plan, the waiting period will be at most 90 days. To be clear, this is not a requirement for employers to provide health insurance. Instead, it sets the maximum amount of time an employee has to wait before being eligible for an employer’s health plan.

 

The ins and outs of the waiting period can sometimes raise questions. For example, some employers may wonder if different classes of employees can have different waiting periods (they can) or if it makes sense to offer coverage before an employee reaches 90 days on the job. Others may even wonder why the 90-day rule exists in the first place.

 

So in this guide, we’ll define what the 90-day waiting period is, why it is important for employers to understand it, and how to stay compliant when offering a health insurance plan.

What is the 90-day waiting period exactly?

First things first, 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 the time period ends, by law, employees must be given the opportunity to get health 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 under the Affordable Care Act, or ACA.”

 

This is a graphic that explains what the 90-day waiting period for health insurance is

 

By the way, companies don’t have to wait 90 days to enroll their new hires. If a company chooses to, their new employees can be eligible for health coverage when their first day on the job rolls around or added to the plan up until the 90-day waiting period ends. Just remember that exceeding 90 days is a no-no, per the law. The purpose of limiting the waiting period is to prevent workers from having to wait too long to get access to health coverage.

Should employers wait the full 90 days?

In most cases, employers will waive the waiting period when a group initially sets up a plan. Not only does this mean that new hires will have one less thing to worry about (especially if they have dependents counting on health coverage, too), but it can also help make employers more attractive to job seekers. Some employers waive the waiting period to avoid the perception of a double standard (or an awkward situation with employees).

 

Remember, as part of the application process when setting up a plan, your broker will ask you about coverage for any employees already on the payroll. For a new plan, they’ll 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 whichever you decide to use — as long as it does not 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 better understand the waiting period and its potential impact on an 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

First and foremost, knowing (and following) the rule helps companies stay compliant with the Affordable Care Act (ACA). As we mentioned earlier, employers who offer group health insurance plans must offer their eligible employees access within the first 90 days on the job. If the period goes past 90 days, an employer has technically broken the rule.

 

Keeps employees in the know

When employees understand how eligibility for group health coverage works (and how long they need to wait), there’s no guesswork about when coverage kicks in. Also, the health plan is likely one of the benefits that caught the attention of your new hire in the first place.

 

In fact, our research shows that access to health insurance is a top perk on the minds of employees, so setting expectations — whether the employee is waiting one or 90 days before enrollment starts — may put that new employee’s mind 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,” explains Foery. “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, it is possible to assign different waiting periods for health insurance to different classes of employees. That said, employers must remember to ensure each group is treated fairly and established as a non-discriminatory class of employees in the benefits plan.

 

Typically, having a different waiting period for different employee classes depends on the size of the group receiving health coverage. For example:

 

Small group

  • There’s usually much less flexibility, and generally, having only one waiting period for employees before they can enroll is the only option.
  • Range: around 100 or fewer employees.

 

Large group

  • If an employer falls into the larger category, there’s usually much more flexibility with the carrier and setting up different employment classes — and having different employee types (within reason).
  • For example, an employer could have one waiting period for managers and another for hourly workers. Just remember that once these are set up for your company, you must stick to them.
  • Range: 100 or more employees.

 

It’s also important to ensure that any differences in waiting periods are justified and not discriminatory based on factors like race, gender, or age.

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 some ideas to consider to keep employees aware of your company’s waiting period policy.

  • Explain what the waiting period is during any employee preboarding or onboarding efforts with new hires.
  • Define what the waiting period is in your employee handbook (whether it’s only a day or set at a maximum of 90 days).

 

Probationary period

Some employers have a “probationary” period when bringing on a new hire. This can be a trial period, where both the employer and employee see if the working relationship is a good fit. Some last 30, 60, or 90 days.

 

The probationary period counts toward the health insurance waiting period. Employers are not supposed to have a separate probationary period for employees to evaluate performance and then start a waiting period after the fact.

 

The waiting period the employee must satisfy to enroll in health coverage begins on their first day on the job.

Does a 90-day waiting period equal three months?

According to the ACA, 90 days is how it sounds: a waiting period is 90 consecutive days (not counted in terms of months), and if it includes weekends and holidays, they count toward the total waiting period.

 

So even though an employee may start the week of July 4 (and end up with a day off because Independence Day falls on a Tuesday), it’s accounted for in the block of 90 days. This means that even though a company is closed for the holiday, that day still counts toward the employee’s waiting period.

Pro tip

Should the employee’s 91st day fall on a non-workday, coverage must be switched on before that day — or on the exact weekend or holiday the 91st falls on.

Take a closer look at the 90-day waiting period

One of the most effective ways for a company to attract (and retain) a talented workforce is to provide access to health insurance. When companies better understand the 90-day waiting period, it helps them stay a step ahead of ACA regulations and sets expectations with their workforce on eligibility for health coverage.

 

It can also go a long way toward fostering goodwill with employees while creating a transparent work environment that improves productivity and retention. If you have any questions about providing a health plan (or what it entails), our team is here to help.

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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.