FAQS ABOUT AFFORDABLE CARE ACT 
IMPLEMENTATION (PART XVI) 
September 4, 2013 
 
Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of 
various provisions of the Affordable Care Act.  These FAQs have been prepared jointly by the 
Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the 
Departments).  Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ 
and http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), these FAQs answer 
questions from stakeholders to help people understand the new law and benefit from it, as 
intended. 
 
Notice of Coverage Options Available Through the Exchanges 
 
Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of the Affordable 
Care Act, generally provides that, in accordance with regulations promulgated by the Secretary 
of Labor, employers must provide each employee notice of coverage options available through a 
Health Insurance Marketplace (also referred to as an Exchange).  On May 8, 2013, the 
Department of Labor issued Technical Release 2013-02 provided temporary guidance on FLSA 
section 18B, as well as model notices.1     
 
Q1:  Is it permissible for another entity (such as an issuer, multiemployer plan, or third-
party administrator) to send the Notice of Coverage Options on behalf of an employer to 
satisfy the employers obligations under FLSA section 18B?   
Yes, an employer will have satisfied its obligation to provide the notice with respect to an 
individual if another party provides a timely and complete notice. The Department of Labor 
notes that, as explained in Technical Release 2013-02, FLSA section 18B requires employers to 
provide notice to all employees, regardless of whether an employee is enrolled in, or eligible for, 
coverage under a group health plan. Accordingly, an employer is not relieved of its statutory 
obligation to provide notice under FLSA section 18B if another entity sends the notice to only 
participants enrolled in the plan, if some employees are not enrolled in the plan.  When providing 
notices on behalf of employers, multiemployer plans, issuers, and third party administrators 
should take proper steps to ensure that a notice is provided to all employees regardless of plan 
enrollment, or communicate clearly to employers that the plan, issuer, or third party 
administrator will provide notice only to a subset of employees (e.g., employees enrolled in the 
plan) and advise of the residual obligations of employers with respect to other employees (e.g., 
employees who are not enrolled in the plan). 
 
 
                                                             
1 See Technical Release 2013-02, model notice for employers who offer a health plan to some or all employees, and 
model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/healthreform/.   
1 
     
90-day Waiting Period Limitation 
PHS Act section 2708 provides that a group health plan or health insurance issuer offering group 
health insurance coverage shall not apply any waiting period that exceeds 90 days.  Section 
2704(b)(4) of the PHS Act, section 701(b)(4) of ERISA, and section 9801(b)(4) of the Code 
define a waiting period to be the period that must pass with respect to the individual before the 
individual is eligible to be covered for benefits under the terms of the plan.   
 
On February 9, 2012, the Departments issued guidance outlining various approaches under 
consideration with respect to PHS Act section 2708 and solicited comments.  After reviewing 
those comments, the Departments provided temporary guidance on August 31, 2012, to remain 
in effect at least through the end of 2014, regarding the 90-day waiting period limitation.  This 
guidance also solicited comments.  After consideration of all of the comments received in 
response to the February 2012 and August 2012 guidance, the Departments published proposed 
regulations on March 21, 2013.   
 
The proposed regulations generally provide that a group health plan or health insurance issuer 
offering group health insurance coverage may not impose a waiting period that exceeds 90 days.  
The proposed rules also provide that a waiting period is the period that must pass before 
coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the 
plan can become effective.  For this purpose, being otherwise eligible to enroll in a plan 
generally means having met the plans substantive eligibility conditions (such as being in an 
eligible job classification or achieving job-related licensure requirements specified in the plans 
terms).  However, eligibility conditions based solely on the lapse of time are permissible for no 
more than 90 days.  Other conditions for eligibility under a plan are generally permissible unless 
the condition is designed to avoid compliance with the 90-day waiting period limitation.  The 
proposed regulations provide several illustrations of how to apply this rule.2 
 
The preamble to the proposed regulations stated that, in the Departments view, the proposed 
rules were consistent with, and no more restrictive on employers than, the August 2012 
guidance.3  Therefore, the Departments stated they will consider compliance with the proposed 
rules as compliance with PHS Act section 2708 at least through 2014.4   
 
Q2:  Will the Departments be issuing final regulations under PHS Act section 2708 that 
give plans and issuers sufficient time to comply with the waiting period limitation? 
 
Yes.  As stated in the proposed rules, plans and issuers can rely on guidance provided in the 
March 2013 proposed rules at least through 2014.  To the extent final regulations are more 
restrictive on plans or issuers than the proposed regulations, they will not be effective prior to 
January 1, 2015 and the Departments expect they will give plans and issuers sufficient time to 
comply. 5  
                                                             
2 See paragraph (c)(3)(i) and (ii) of the proposed regulations, addressing the application of plan provisions requiring 
certain hours-of-service per period to variable hour employees and cumulative service requirements. 
3 78 FR 17317, March 21, 2013. 
4 Id. 
5 78 FR 71313, 17317 (March 21, 2013). 
2 
     
 
Under the proposed rules, to the extent plans and issuers impose substantive eligibility 
requirements not based solely on the lapse of time, these eligibility provisions are permitted if 
they are not designed to avoid compliance with the 90-day waiting period limitation.  Therefore, 
for example, if a multiemployer plan operating pursuant to an arms-length collective bargaining 
agreement has an eligibility provision that allows employees to become eligible for coverage by 
working hours of covered employment across multiple contributing employers (which often 
aggregates hours by calendar quarter and then permits coverage to extend for the next full 
calendar quarter, regardless of whether an employee has terminated employment), the 
Departments would consider that provision designed to accommodate a unique operating 
structure, (and, therefore, not designed to avoid compliance with the 90-day waiting period 
limitation). 
 
 
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