To be considered eligible for health coverage under an employer’s benefit package, there is typically a 90-day waiting period. This is the maximum number of days a business can wait to make an employee eligible to receive health benefits under their policy established under the Patient Protection and Affodable Care Act. According to Business Insurance, only a select number of employers actually implement a 90-day waiting period though. A survey released by the Kaiser Family Foundation defined the average waiting period of around 1.8 months.
However, on Friday June 20, a new update was released as a revision to the ACA which now defines a set “orientation period” for employers. The orientation period is set at one month prior to the established maximum 90-day waiting period.
What is an orientation period?
- Time period where an employer reviews a new employee’s performance to determine if the employee is a good fit for the business
- Time period to train the employee on the business, practices, tools, operations, etc.
- Calculated as one month minus one day from the start date. For example, an employee who started on May 3 would be completed with the “orientation period” on June 2.
So what does this mean for new hires?
- A new employee may have to wait one month to complete the orientation period
- A new employee may wait up to 90 days + the orientation period to receive health benefits from an employer
How does this affect employers?
- Employers now have a defined orientation period and waiting period to determine whether or not their employees are eligible for health coverage
- There is a penalty established in 2014 stating that an employer who violates the mandated waiting period of 90 days must pay a fine of $100 per employee per day of violation
Do you have any questions on how the newly defined orientation period may affect your business? Please feel free to contact us for assistance.