Healthcare.jpgThis blog post, authored by Heather DeBlanc, replaces and supersedes the post that was published on June 14, 2013, on this topic.

One of the challenges facing employers in complying with healthcare reform is reconciling federal requirements with the requirements of California law.  On March 21, 2013, the Departments of Labor, Health and Human Services and Treasury issued proposed regulations addressing the Affordable Care Act’s (“ACA”) 90-day waiting period limitation for employees and their dependents who are otherwise eligible for healthcare coverage.  California statutes limit waiting periods to 60 days for most health plans.  For public agencies, the regulations interpreting the Public Employees’ Medical and Hospital Care Act (“PEMHCA”) specifies a 60-day timeframe for enrollment of eligible employees by CalPERS contracting agencies.  Employers should review existing waiting period policies for all employees, and make changes necessary to align their policies with the provisions outlined below. 

This also means that employers who adopt the Look Back Measurement Method Safe Harbor under ACA’s Shared Responsibility Provisions should limit administrative periods to no more than 60 days to ensure compliance with stricter California laws.  Employees who are reasonably expected to work full-time at the date of hire should be offered coverage within 60 days to comply with the stricter requirements.

Under California Law Waiting Periods Are Limited to 60 Days or Less – California statutory law also requires that fully insured health plans may not apply a waiting period longer than 60 days. (California Health & Safety Code section 1357.51; Insurance Code section 10198.7(c)(1))  This means that an employer should not require an employee who qualifies for coverage to wait more than 60 days before that coverage becomes effective.

Under PEMHCA, Contracting Agencies Must Enroll Eligible Employees within 60 Days – PEMHCA requires a contracting agency to offer eligible employees the opportunity to enroll, or register not to enroll, no later than the 60th calendar day of employment.  Active employees are eligible to enroll if they have an appointment that is intended to last more than six months at half-time or greater.  Intermittent, irregular and less than half-time employees are generally not eligible for coverage, but less than half time employees with an appointment of 6 months or longer would be eligible if the contracting agency has chosen to extend coverage to them via a resolution submitted to CalPERS.  If such a resolution has been filed, the enrollment date is 60 days from the employee’s start date.  

Under ACA, Waiting Periods Limited to 90 Days or Less – For plan years beginning on or after January 1, 2014, ACA prohibits group health plans and group health insurance issuers from imposing a waiting period that exceeds 90 days.  A “waiting period” is any period of time that must pass before coverage becomes effective for an employee or dependent who otherwise meets plan eligibility requirements.  An employer must offer an eligible employee coverage that is effective by the 91st calendar day, including weekends and holidays.  If an employee takes longer than 90 days to accept the offered coverage, the employer is not in violation of the 90-day limit.

Despite ACA’s 90 day-limit, employers that adopt the Look Back Measurement Method Safe Harbor should ensure that Administrative Periods are no more than 60 days in order to comply with PEMHCA and/or to avoid violating the waiting period requirements under California law.  For additional information on the Look Back Measurement Method Safe Harbor, see