California Repeals 60-Day Waiting Period on Health Insurance

By Sara Richland

Under the Patient Protection and Affordable Care Act, 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.

California repeals the 60-day wait rule

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 Sept. 30, 2013, California Gov. Jerry 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.

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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 Jan. 1, 2014.

Change will conform to ACA standard

Effective this month, however (Aug. 15, 2014), 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 Brown repealed California’s 60-day rule.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.

This was originally published on Littler Mendelson’s Employment Benefits Counsel blog© 2014 Littler Mendelson. All Rights Reserved. Littler®, Employment & Labor Law Solutions Worldwide® and ASAP® are registered trademarks of Littler Mendelson, P.C.

Sara Richland is an associate in the Los Angeles/Century City office of the law firm Littler Mendelson. Her practice focuses on all aspects of employee benefits and executive compensation law. She advises clients regarding employee benefit plan design and administration, establishes and evaluates compensation arrangements for executives, and assesses employee benefit and executive compensation aspects of corporate transactions. Contact her at srichland@littler.com.

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1 Comment on “California Repeals 60-Day Waiting Period on Health Insurance

  1. This means that insurance companies will now only sell policies on the exchange during an open season every year. If you don’t buy it during that time you’ll have to wait until the next open season.

    If they don’t do that nobody will buy a policy until they get sick.

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