California Repeals 60-Day Limit on Health Insurance Waiting Periods

Under the Patient Protection and Affordable Care Act (ACA), a “waiting period” is defined as the period that must pass before coverage for an individual who is otherwise eligible to enroll under the terms of a group health plan can become effective. The ACA prohibits group health plans and group health insurance issuers from imposing a waiting period that exceeds 90 days after an employee is otherwise eligible for health coverage. Generally, an individual is “eligible” to enroll in a health plan if he or she has met the plan’s substantive eligibility conditions, such as being in an eligible job classification, earning a certain level of commission, or satisfying a reasonable and bona fide employment-based orientation period. Once an individual is determined to be eligible for coverage under the terms of the health plan, the ACA’s final rule provides that a waiting period cannot exceed 90 days, including the enrollment date, weekends and holidays.

On September 30, 2013, California Governor Brown signed into law a bill that limited such waiting periods to 60 days for California insurers. This law applied to any insured plan, large or small, that provided benefits to residents in California regardless of the site of the contract or the policyholder. The law did not apply to self-insured plans nor to plans issued, renewed or delivered in other states – such plans still had to comply with the ACA’s 90-day waiting period limit. The 60-day limit applied as of the first day of any plan year beginning on or after January 1, 2014.

Effective August 15, 2014, however, Gov. Brown repealed California’s 60-day rule. The repeal is intended to prohibit California’s insurance carriers from imposing any state-specific waiting period, leaving employers free to have waiting periods of up to 90 days to conform to the ACA rule. This change to conform to the ACA standard is expected to clear up complexities created by the 60-day limit, particularly for California employers that sponsored both self-funded and insured health plans.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.