Vol. 79 Monday, 

No. 36 February 24, 2014 

Part III 

Department of the Treasury 

Internal Revenue Service 

26 CFR Part 54 

Department of Labor 

Employee Benefits Security Administration 

29 CFR Part 2590 

Department of Health and Human Services 

45 CFR Parts 144, 146, and 147 

Ninety-Day Waiting Period Limitation and Technical Amendments to Certain 

Health Coverage Requirements Under the Affordable Care Act; Final Rule 


emcdonald on DSK67QTVN1PROD with RULES3
10296 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

1The term ‘‘group health plan’’ is used in title 

XXVII of the PHS Act, part 7 of ERISA, and chapter 

100 of the Code, and is distinct from the term 

‘‘health plan,’’ as used in other provisions of title 

I of the Affordable Care Act. The term ‘‘health plan’’ 

does not include self-insured group health plans. 

2Note, however, that in the Economic Analysis 

and Paperwork Burden section of this preamble, in 

sections under headings listing only two of the 

three Departments, the term ‘‘Departments’’ 

generally refers only to the two Departments listed 

in the heading. 3 26 CFR 54.9801–3(a)(3)(iii), 29 CFR 2590.701– 

3(a)(3)(iii), and 45 CFR 146.111(a)(3)(iii). 4 Department of Labor Technical Release 2012– 

01, IRS Notice 2012–17, and HHS FAQs issued 

February 9, 2012. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[T.D. 9656] 

RIN 1545–BL50 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB56 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144, 146, and 147 

[CMS–9952–F] 

RIN 0938–AR77 

Ninety-Day Waiting Period Limitation 

and Technical Amendments to Certain 

Health Coverage Requirements Under 

the Affordable Care Act 

AGENCY: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Final rule. 

SUMMARY: These final regulations 

implement the 90-day waiting period 

limitation under section 2708 of the 

Public Health Service Act, as added by 

the Patient Protection and Affordable 

Care Act (Affordable Care Act), as 

amended, and incorporated into the 

Employee Retirement Income Security 

Act of 1974 and the Internal Revenue 

Code. These regulations also finalize 

amendments to existing regulations to 

conform to Affordable Care Act 

provisions. Specifically, these rules 

amend regulations implementing 

existing provisions such as some of the 

portability provisions added by the 

Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

because those provisions of the HIPAA 

regulations have become superseded or 

require amendment as a result of the 

market reform protections added by the 

Affordable Care Act. 

DATES: Effective date. These final 

regulations are effective on April 25, 

2014. 

Applicability date. The 90-day 

waiting period limitation provisions of 

these final regulations apply to group 

health plans and group health insurance 

issuers for plan years beginning on or 

after January 1, 2015. The amendments 

made by these final regulations to the 

evidence of creditable coverage 

provisions of 26 CFR 54.9801–5, 29 CFR 

2590.701–5, and 45 CFR 146.115 apply 

beginning December 31, 2014. All other 

amendments made by these final 

regulations apply to group health plans 

and health insurance issuers for plan 

years beginning on or after April 25, 

2014. Until the amendments to the 

existing HIPAA final regulations 

become applicable, plans and issuers 

must continue to comply with the 

existing regulations, as applicable. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Elizabeth Schumacher, 

Employee Benefits Security 

Administration, Department of Labor, at 

(202) 693–8335; Karen Levin, Internal 

Revenue Service, Department of the 

Treasury, at (202) 317–6846; or Cam 

Moultrie Clemmons, Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, at (410) 786–1565. 

Customer service information: 

Individuals interested in obtaining 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

Web site (www.dol.gov/ebsa). In 

addition, information from HHS on 

private health insurance for consumers 

can be found on the Centers for 

Medicare & Medicaid Services (CMS) 

Web site (www.cciio.cms.gov/) and 

information on health reform can be 

found at www.HealthCare.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, was 

enacted on March 23, 2010, and the 

Health Care and Education 

Reconciliation Act, Public Law 111– 

152, was enacted on March 30, 2010. 

(They are collectively known as the 

‘‘Affordable Care Act’’.) The Affordable 

Care Act reorganizes, amends, and adds 

to the provisions of part A of title XXVII 

of the Public Health Service Act (PHS 

Act) relating to group health plans and 

health insurance issuers in the group 

and individual markets. The term 

‘‘group health plan’’ includes both 

insured and self-insured group health 

plans.1 The Affordable Care Act adds 

section 715(a)(1) to the Employee 

Retirement Income Security Act (ERISA) 

and section 9815(a)(1) to the Internal 

Revenue Code (the Code) to incorporate 

the provisions of part A of title XXVII 

of the PHS Act into ERISA and the 

Code, and to make them applicable to 

group health plans and health insurance 

issuers providing health insurance 

coverage in connection with group 

health plans. The PHS Act sections 

incorporated by these references are 

sections 2701 through 2728. 

PHS Act section 2708, as added by the 

Affordable Care Act and incorporated 

into ERISA and the Code, provides that 

a group health plan or health insurance 

issuer offering group health insurance 

coverage shall not apply any waiting 

period (as defined in PHS Act section 

2704(b)(4)) that exceeds 90 days. PHS 

Act section 2704(b)(4), ERISA section 

701(b)(4), and Code section 9801(b)(4) 

define a waiting period to be the period 

that must pass with respect to an 

individual before the individual is 

eligible to be covered for benefits under 

the terms of the plan. In 2004 

regulations implementing the Health 

Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

portability provisions (2004 HIPAA 

regulations), the Departments of Labor, 

Health and Human Services (HHS), and 

the Treasury (collectively, the 

Departments) 2 defined a waiting period 

to mean the period that must pass before 

coverage for an employee or dependent 

who is otherwise eligible to enroll under 

the terms of a group health plan can 

become effective.3 PHS Act section 2708 

does not require an employer to offer 

coverage to any particular individual or 

class of individuals, including part-time 

employees. PHS Act section 2708 

merely prevents an otherwise eligible 

employee (or dependent) from being 

required to wait more than 90 days 

before coverage becomes effective. PHS 

Act section 2708 applies to both 

grandfathered and non-grandfathered 

group health plans and group health 

insurance coverage for plan years 

beginning on or after January 1, 2014. 

On February 9, 2012, the Departments 

issued guidance 4 outlining various 

approaches under consideration with 

respect to both the 90-day waiting 

period limitation and the employer 

shared responsibility provisions under 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10297 

5 Department of Labor Technical Release 2012– 

02, IRS Notice 2012–59, and HHS FAQs issued 

August 31, 2012. 

6See 26 CFR 54.4980H–3(d)(3)(i), at 79 FR 8544 

(February 12, 2014). 

7See section 4980H of the Code and its 

implementing regulations for an applicable large 

employer’s shared responsibility to provide health 

coverage to full-time employees. 

8 78 FR 17313, 17316 (March 21, 2013). See also 

Code section 36B and its implementing regulations, 

and www.healthcare.gov for information on an 

individual’s eligibility for premium tax credits in 

the Affordable Insurance Exchange or ‘‘Exchange’’ 

(also referred to as Health Insurance Marketplace or 

‘‘Marketplace’’) generally, as well as during a 

waiting period for coverage under a group health 

plan. 

9The preamble to the proposed regulations stated 

that the proposed regulations are consistent with, 

and no more restrictive on employers than, the 

August 2012 guidance. See 78 FR 17313, 17317 

(March 21, 2013). The August 2012 guidance 

similarly provided that group health plans and 

group health insurance issuers may rely on the 

compliance guidance through at least the end of 

2014. See Department of Labor Technical Release 

2012–02, IRS Notice 2012–59, and HHS FAQs 

issued August 31, 2012. 

10Affordable Care Act section 1201 also moved 

those provisions from PHS Act section 2701 to PHS 

Act section 2704. See also 75 FR 37188 (June 28, 

2010). 

11 75 FR 37188 (June 28, 2010). 

12 75 FR 27122 (May 13, 2010). 

13The proposed regulations used several different 

terms when referencing individuals, such as 

employees and dependents, and participants and 

beneficiaries. Where it is appropriate, the final 

regulations replace these references with the term 

‘‘individual’’ for consistency purposes. This is 

merely a change to eliminate any confusion that 

may occur as a result of using multiple terms 

interchangeably and does not change the substance 

of the rules as PHS Act section 2708 limits applying 

a waiting period that exceeds 90 days to any 

individual who is otherwise eligible to enroll under 

the terms of the plan. 

Code section 4980H (February 2012 

guidance) and requested public 

comment. On August 31, 2012, 

following their review of the comments 

on the February 2012 guidance, the 

Departments provided temporary 

guidance,5 to remain in effect at least 

through the end of 2014, regarding the 

90-day waiting period limitation, and 

described the approach they intended to 

propose in future rulemaking (August 

2012 guidance). After consideration of 

all of the comments received in 

response to the February 2012 guidance 

and August 2012 guidance, the 

Departments issued proposed 

regulations on March 21, 2013 (78 FR 

17313). 

Under the proposed regulations, a 

group health plan and a health 

insurance issuer offering group health 

insurance coverage may not apply any 

waiting period that exceeds 90 days. 

The regulations proposed to define 

‘‘waiting period’’ as the period that must 

pass before coverage for an employee or 

dependent who is otherwise eligible to 

enroll under the terms of a group health 

plan can become effective. Being 

otherwise eligible to enroll in a plan 

means having met the plan’s substantive 

eligibility conditions (such as being in 

an eligible job classification or 

achieving job-related licensure 

requirements specified in the plan’s 

terms). Eligibility conditions that are 

based solely on the lapse of a time 

period would be permissible for no 

more than 90 days. Other conditions for 

eligibility under the terms of a group 

health plan (that is, those that are not 

based solely on the lapse of a time 

period) are generally permissible under 

PHS Act section 2708 and the proposed 

regulations unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation. 

Among other things, the proposed 

regulations addressed application of 

waiting periods to certain plan 

eligibility conditions. The proposed 

regulations provided that if a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time to 

determine whether the employee meets 

the plan’s eligibility condition, which 

may include a measurement period 6 of 

no more than 12 months that begins on 

any date between the employee’s start 

date and the first day of the first 

calendar month following the 

employee’s start date if coverage is 

made effective no later than 13 months 

from the employee’s start date plus, if 

the employee’s start date is not the first 

day of a calendar month, the time 

remaining until the first day of the next 

calendar month, and no waiting period 

that exceeds 90 days is imposed in 

addition to the measurement period. 

The proposed regulations also 

addressed cumulative hours-of-service 

requirements, which use more than 

solely the passage of a time period in 

determining whether employees are 

eligible for coverage. Under the 

proposed regulations, if a group health 

plan or group health insurance issuer 

conditions eligibility on the completion 

by an employee (part-time or full-time) 

of a number of cumulative hours of 

service, the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours.7 Under the 

proposed regulations, the plan’s waiting 

period must begin once the new 

employee satisfies the plan’s cumulative 

hours-of-service requirement and may 

not exceed 90 days. The preamble to the 

proposed regulations stated that this 

provision is designed to be a one-time 

eligibility requirement only and that the 

proposed regulations do not permit, for 

example, re-application of such a 

requirement to the same individual each 

year.8 The preamble to the proposed 

regulations also provided that the 

Departments would consider 

compliance with these proposed 

regulations to constitute compliance 

with PHS Act section 2708 at least 

through the end of 2014.9

The proposed regulations also 

included proposed amendments to 

conform to Affordable Care Act 

provisions already in effect as well as 

those that would become effective in 

2014. The regulations proposed 

amending the 2004 HIPAA regulations 

implementing Code section 9801, ERISA 

section 701, and PHS Act section 2701 

(as originally added by HIPAA), to 

remove provisions superseded by the 

prohibition on preexisting conditions 

under PHS Act section 2704, added by 

the Affordable Care Act.10 Additionally, 

the regulations proposed to amend 

examples and provisions in 26 CFR Part 

54, 29 CFR Part 2590, and 45 CFR Parts 

144 and 146 to conform to other changes 

made by the Affordable Care Act, such 

as the elimination of lifetime and 

annual limits under PHS Act section 

2711 and its implementing 

regulations,11 as well as the provisions 

governing dependent coverage of 

children to age 26 under PHS Act 

section 2714 and its implementing 

regulations.12

After consideration of the comments 

and feedback received from 

stakeholders, the Departments are 

publishing these final regulations. 

II. Overview of the Final Regulations 

A. Prohibition on Waiting Periods That 

Exceed 90 Days 

These final regulations provide that a 

group health plan, and a health 

insurance issuer offering group health 

insurance coverage, may not apply a 

waiting period that exceeds 90 days. 

(Nothing in these final regulations 

requires a plan or issuer to have any 

waiting period, or prevents a plan or 

issuer from having a waiting period that 

is shorter than 90 days.) If, under the 

terms of the plan, an individual 13 can 

elect coverage that becomes effective on 

a date that does not exceed 90 days, the 

coverage complies with the 90-day 


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10298 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

14 26 CFR 54.9801–6, 29 CFR 2590.701–6, and 45 

CFR 146.117. 

15 45 CFR 147.104(b)(5). 

16See also section 4980H of the Code and its 

implementing regulations for an applicable large 

employer’s shared responsibility to provide health 

coverage to full-time employees (and their 

dependents). 

waiting period limitation, and the plan 

or issuer will not be considered to 

violate the waiting period rules merely 

because individuals may take additional 

time (beyond the end of the 90-day 

waiting period) to elect coverage. 

These final regulations continue to 

define ‘‘waiting period’’ 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. These final 

regulations also continue to include the 

clarification that, if an individual 

enrolls as a late enrollee or special 

enrollee, any period before the late or 

special enrollment is not a waiting 

period. The effective date of coverage 

for special enrollees continues to be that 

set forth in the Departments’ 2004 

HIPAA regulations governing special 

enrollment 14 (and, if applicable, in HHS 

regulations addressing guaranteed 

availability).15

The final regulations set forth rules 

governing the relationship between a 

plan’s eligibility criteria and the 90-day 

waiting period limitation. Specifically, 

these final regulations provide that 

being otherwise eligible to enroll in a 

plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification, achieving job-related 

licensure requirements specified in the 

plan’s terms, or satisfying a reasonable 

and bona fide employment-based 

orientation period). The 90-day waiting 

period limitation generally does not 

require the plan sponsor to offer 

coverage to any particular individual or 

class of individuals (including, for 

example, part-time employees). Instead, 

these final regulations prohibit requiring 

otherwise eligible individuals to wait 

more than 90 days before coverage 

becomes effective.16

Under these final regulations, 

eligibility conditions that are based 

solely on the lapse of a time period are 

permissible for no more than 90 days. 

Other conditions for eligibility under 

the terms of a group health plan (that is, 

those that are not based solely on the 

lapse of a time period) are generally 

permissible under PHS Act section 2708 

and these final regulations, unless the 

condition is designed to avoid 

compliance with the 90-day waiting 

period limitation. 

The proposed regulations included an 

approach when applying waiting 

periods to variable-hour employees in 

cases in which a specified number of 

hours of service per period is a plan 

eligibility condition. In general, the 

proposed regulations provided that, 

except for cases in which a waiting 

period that exceeds 90 days is imposed 

in addition to a measurement period, 

the time period for determining whether 

a variable-hour employee meets the 

plan’s hours of service per period 

eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date plus, if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

Some commenters requested a rule 

permitting plans to impose a 90-day 

waiting period in addition to the 12- 

month measurement period, arguing 

that restricting the period to 13 months 

plus the time remaining until the first 

day of the next calendar month would 

in effect be a one month waiting period 

and impose administrative hardship. 

Other commenters requested that the 

final regulations eliminate the 

allowance of a measurement period and 

require coverage to begin no later than 

90 days from the employee’s start date. 

These final regulations retain the 

approach in the proposed regulations 

and provide that if a group health plan 

conditions eligibility on an employee 

regularly having a specified number of 

hours of service per period (or working 

full-time), and it cannot be determined 

that a newly-hired employee is 

reasonably expected to regularly work 

that number of hours per period (or 

work full-time), the plan may take a 

reasonable period of time, not to exceed 

12 months and beginning on any date 

between the employee’s start date and 

the first day of the first calendar month 

following the employee’s start date, to 

determine whether the employee meets 

the plan’s eligibility condition, which 

may include a measurement period of 

no more than 12 months that begins on 

any date between the employee’s start 

date and the first day of the first 

calendar month following the 

employee’s start date. (This is consistent 

with the timeframe permitted for such 

determinations under Code section 

4980H and its implementing 

regulations.) Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether a variable-hour employee meets 

the plan’s hours of service per period 

eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

The proposed regulations also 

addressed cumulative hours-of-service 

requirements, which use more than 

solely the passage of a time period in 

determining whether employees are 

eligible for coverage. These final 

regulations retain the provisions of the 

proposed regulations, described earlier 

in this preamble, without change. 

Therefore, under these final regulations, 

if a group health plan or group health 

insurance issuer conditions eligibility 

on the completion by an employee (parttime or full-time) of a number of 

cumulative hours of service, the 

eligibility condition is not considered to 

be designed to avoid compliance with 

the 90-day waiting period limitation if 

the cumulative hours-of-service 

requirement does not exceed 1,200 

hours. Under the final regulations, the 

plan’s waiting period must begin on the 

first day after the employee satisfies the 

plan’s cumulative hours-of-service 

requirement and may not exceed 90 

days. Furthermore, this provision 

continues to be designed to be a onetime eligibility requirement only; these 

final regulations do not permit, for 

example, re-application of such a 

requirement to the same individual each 

year. 

In response to the proposed 

regulations, commenters requested 

additional clarifications to allow plans 

and issuers to better coordinate the 90- 

day waiting period requirements with 

the rules under Code section 4980H, 

which, in the case of full-time 

employees of applicable large 

employers, generally requires as a 

condition for avoiding a penalty that 

health benefits begin by the first day of 

the fourth calendar month following the 

month in which the full-time employee 

begins employment. Commenters 

argued that, without coordination, the 

PHS Act section 2708 waiting period 

limitation could effectively require 

coverage to begin sooner than required 

under the rules implementing section 

4980H of the Code and undermine the 

entire Code section 4980H framework, 

which Congress could not have 

intended. Other commenters argued that 

some employers might offer coverage to 

employees only because of their 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10299 

17These final regulations also note that a plan or 

issuer that imposes a 90-day waiting period may, 

for administrative convenience, choose to permit 

coverage to become effective earlier than the 91st 

day if the 91st day is a weekend or holiday. 

18The proposed regulations provide that if there 

is not a corresponding date in the next calendar 

month upon adding a calendar month, the last 

permitted day of the orientation period is the last 

day of the next calendar month. For example, if the 

employee’s start date is January 30, the last 

permitted day of the orientation period is February 

28 (or February 29 in a leap year). Similarly, if the 

employee’s start date is August 31, the last 

permitted day of the orientation period is 

September 30. 

19See FAQs about Affordable Care Act 

Implementation (Part XVI), Q2, available at http:// 

www.dol.gov/ebsa/faqs/faq-aca16.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs16.html. 

obligations under Code section 4980H, 

so that an eligibility provision that 

makes an offer of coverage consistent 

with section 4980H should be 

permissible without requiring coverage 

to begin sooner than the regulations 

implementing section 4980H require. 

Some commenters stated that their 

systems are not capable of beginning 

coverage other than at the beginning of 

a month, and it is thus common practice 

to have a 90-day waiting period with 

coverage effective the first day of the 

first month following a 90-day waiting 

period. These commenters requested the 

flexibility to continue this approach. 

Similarly, several commenters 

specifically requested that plans be 

permitted to impose a waiting period of 

three calendar months instead of 90 

days, as it would be less confusing to 

participants and easier for plans and 

issuers to administer. 

Under these final regulations, after an 

individual is determined to be 

otherwise eligible for coverage under 

the terms of the plan, any waiting 

period may not extend beyond 90 days, 

and all calendar days are counted 

beginning on the enrollment date, 

including weekends and holidays.17

However, as noted above, the final 

regulations provide that a requirement 

to successfully complete a reasonable 

and bona fide employment-based 

orientation period may be imposed as a 

condition for eligibility for coverage 

under a plan. Specifically, the final 

regulations add an example of 

permissible substantive eligibility 

conditions under a group health plan. 

The proposed regulations had included 

being in an eligible job classification 

and achieving job-related licensure 

requirements specified in the plan’s 

terms. The final regulations add a third 

example regarding the satisfaction of a 

reasonable and bona fide employmentbased orientation period. The final 

regulations do not specify the 

circumstances under which the duration 

of an orientation period would not be 

considered ‘‘reasonable or bona fide.’’ 

However, proposed regulations 

published elsewhere in this issue of the 

Federal Register propose one month as 

the maximum length of any orientation 

period meaning generally a period that 

begins on any day of a calendar month 

and is determined by adding one 

calendar month and then subtracting 

one calendar day).18 Comments are 

invited on those proposed regulations 

and may be submitted as described in 

the proposed regulations. The 

Departments will consider compliance 

with those proposed regulations to 

constitute a reasonable and bona fide 

employment-based orientation period 

under PHS Act section 2708 at least 

through the end of 2014. To the extent 

final regulations or other guidance with 

respect to the application of the 90-day 

waiting period limitation to orientation 

periods is more restrictive on plans and 

issuers, the final regulations or other 

guidance will not be effective prior to 

January 1, 2015, and plans and issuers 

will be given a reasonable time period 

to comply. 

In response to the proposed 

regulations, several commenters 

requested clarification regarding 

application of the rules to employees 

that are terminated from employment 

and then rehired by the same employer. 

Similarly, commenters requested 

clarification regarding application of the 

rules when an employee moves between 

a job classification that is or is not an 

eligible job classification for coverage 

under the plan. 

After consideration of the comments, 

these final regulations provide that a 

former employee who is rehired may be 

treated as newly eligible for coverage 

upon rehire and, therefore, a plan or 

issuer may require that individual to 

meet the plan’s eligibility criteria and to 

satisfy the plan’s waiting period anew, 

if reasonable under the circumstances 

(for example, the termination and rehire 

cannot be a subterfuge to avoid 

compliance with the 90-day waiting 

period limitation). The same analysis 

would apply to an individual who 

moves to a job classification that is 

ineligible for coverage under the plan 

but then later moves back to an eligible 

job classification. 

Many commenters raised 

administrative concerns relating to the 

application of the rules to 

multiemployer plans. In the preamble to 

the proposed regulations, the 

Departments recognized that 

multiemployer plans maintained 

pursuant to collective bargaining 

agreements have unique operating 

structures and may include different 

eligibility conditions based on the 

participating employer’s industry or the 

employee’s occupation. For example, 

some multiemployer plans determine 

eligibility based on complex formulas 

for earnings and residuals or use ‘‘hours 

banks’’ in which workers’ excess hours 

from one measurement period are 

credited against any shortage of hours in 

a succeeding measurement period, 

functioning as buy-in provisions to 

prevent lapses in coverage. Some 

commenters on the proposed 

regulations pointed out that collectively 

bargained plans, owing to the nature of 

the bargaining process, often have 

detailed and coordinated eligibility 

provisions (some requiring aggregation 

of data from multiple contributing 

employers). Others stated that the 

unique operating structure of 

multiemployer plans often allows for 

continued coverage after an employee’s 

employment terminates (or after an 

employee’s hours are reduced) until the 

end of the quarter. 

On September 4, 2013, the 

Departments issued a set of frequently 

asked questions (FAQs) stating that, 

‘‘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.’’ 19

The FAQs further provide that, 

‘‘[t]herefore, 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).’’ These final 

regulations include an example 

consistent with this FAQ. 

While the requirements of PHS Act 

section 2708 and these final regulations 

apply to both the plan and issuer 

offering coverage in connection with 

such plan, to the extent coverage under 

a group health plan is insured by a 

health insurance issuer, paragraph (f) of 

these regulations provides that the 

issuer can rely on the eligibility 


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10300 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

20The Departments note that, with respect to 

individuals who are in a waiting period for 

coverage before the statutory effective date of PHS 

Act section 2708, beginning on the first day the 

statute applies to the plan, any waiting period can 

no longer apply in a manner that exceeds 90 days. 

This clarification was included in the proposed 

regulations, but has not been retained in the final 

regulations, because individuals will not be in a 

waiting period that exceeds 90 days by the 

applicability date of the final regulations. 

21 26 CFR 54.9801–3(a)(2) Example 8; 29 CFR 

2590.701–3(a)(2) Example 8, and 45 CFR 

146.111(a)(2) Example 8. 

22 26 CFR 54.9802–1(b)(2)(i)(D) Example 4, 29 

CFR 2590.702(b)(2)(i)(D) Example 4, and 45 CFR 

146.121(b)(2)(i)(D) Example 4. 

information reported to it by an 

employer (or other plan sponsor) and 

will not be considered to violate the 

requirements of these final regulations 

in administering the 90-day waiting 

period limitation if: (1) The issuer 

requires the plan sponsor to make a 

representation regarding the terms of 

any eligibility conditions or waiting 

periods imposed by the plan sponsor 

before an individual is eligible to 

become covered under the terms of the 

plan (and requires the plan sponsor to 

update this representation with any 

applicable changes); and (2) the issuer 

has no specific knowledge of the 

imposition of a waiting period that 

would exceed the permitted 90-day 

period. 

Consistent with the statutory effective 

date of PHS Act section 2708, the 

Departments proposed that the 90-day 

waiting period limitation would become 

applicable for plan years beginning on 

or after January 1, 2014, for both 

grandfathered and non-grandfathered 

group health plans and health insurance 

issuers offering group health insurance 

coverage. As with the applicability of 

the 2004 HIPAA regulations, the 

proposed regulations stated that, with 

respect to individuals who are in a 

waiting period for coverage before the 

applicability date of the regulations, 

beginning on the first day these rules 

apply to the plan, any waiting period 

can no longer apply in a manner that 

exceeds 90 days from the beginning of 

the waiting period, even if the waiting 

period began before the first day the 

rules apply to the plan. 

The August 2012 guidance provided 

that group health plans and health 

insurance issuers may rely on the 

compliance guidance through at least 

the end of 2014. The preamble to the 

proposed regulations stated that, in the 

Departments’ view, the proposed 

regulations are consistent with, and no 

more restrictive on employers than, the 

August 2012 guidance, and that 

therefore, the Departments will consider 

compliance with the proposed 

regulations to constitute compliance 

with PHS Act section 2708 at least 

through the end of 2014. The 90-day 

waiting period provisions of these final 

regulations apply to group health plans 

and group health insurance issuers for 

plan years beginning on or after January 

1, 2015. For plan years beginning in 

2014, the Departments will consider 

compliance with either the proposed 

regulations or these final regulations to 

constitute compliance with PHS Act 

section 2708.20

B. Conforming Changes to Existing 

Regulations 

The proposed regulations included 

proposed conforming amendments to 

the 2004 HIPAA regulations 

implementing Code section 9801, ERISA 

section 701, and PHS Act section 2701 

(as originally added by HIPAA), to 

remove provisions superseded by the 

prohibition on preexisting conditions 

under PHS Act section 2704 (as added 

by the Affordable Care Act) and the 

implementing regulations, including 

elimination of the requirement to issue 

certificates of creditable coverage. The 

regulations proposed that these 

amendments would become applicable 

after issuance of the final regulations; 

however, the proposal to eliminate the 

requirement to issue certificates of 

creditable coverage was proposed to 

apply beginning December 31, 2014, so 

that individuals needing to offset a 

preexisting condition exclusion under a 

plan that will become subject to the 

prohibition on preexisting conditions 

starting with a plan year beginning on 

December 31, 2014 would still have 

access to the certificate for proof of 

coverage until that time. Commenters 

requested that the requirement to 

provide certificates of creditable 

coverage be eliminated beginning in 

2014 because the certificates are no 

longer necessary. Commenters 

explained that the need for certificates 

after 2013 would be relatively rare and 

requested that plans and issuers be 

required to provide certificates in 2014 

only upon request. 

These final regulations adopt without 

substantive change the proposed 

conforming amendments. A minor 

clarification was added to the Example 

7 of the rules regarding limitations on 

preexisting condition exclusion 

periods,21 and Example 4 of the rules 

prohibiting discrimination against 

participants and beneficiaries based on 

a health factor,22 to clarify that any 

reference to essential health benefit for 

purposes of the individual and small 

group markets is dependent upon the 

State essential health benefits 

benchmark plan as defined in HHS 

regulations at 45 CFR 156.20. 

Additionally, HHS is not finalizing the 

proposed amendments to 45 CFR 

146.145(b) because the provision was 

stricken in previous rulemaking (78 FR 

at 65092, October 30, 2013). 

The prohibition with respect to adults 

on preexisting condition exclusions 

applies for plan years (or, in the 

individual market, policy years) 

beginning on or after January 1, 2014. If 

a plan had a plan year beginning 

December 31, 2013, the plan could 

impose a preexisting condition 

exclusion, and an individual could need 

a certificate of creditable coverage, 

through December 30, 2014. 

All other amendments made by these 

final regulations to the 2004 HIPAA 

regulations apply to group health plans 

and health insurance issuers for plan 

years beginning on or after April 25, 

2014. Until the amendments to the 

existing HIPAA final regulations 

become applicable, plans and issuers 

must continue to comply with the 

existing regulations, to the extent 

consistent with amendments to the 

statute. 

III. Economic Impact and Paperwork 

Burden 

A. Executive Order 12866 and 13563— 

Department of Labor and Department of 

Health and Human Services 

Executive Order 13563 emphasizes 

the importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing and streamlining rules, 

and of promoting flexibility. It also 

requires federal agencies to develop a 

plan under which the agencies will 

periodically review their existing 

significant regulations to make the 

agencies’ regulatory programs more 

effective or less burdensome in 

achieving their regulatory objectives. 

Under Executive Order 12866, a 

regulatory action deemed ‘‘significant’’ 

is subject to the requirements of the 

Executive Order and review by the 

Office of Management and Budget 

(OMB). Section 3(f) of the Executive 

Order defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in a rule (1) having an annual 

effect on the economy of $100 million 

or more, or adversely and materially 

affecting a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or tribal governments or 

communities (also referred to as 

‘‘economically significant’’); (2) creating 

serious inconsistency or otherwise 

interfering with an action taken or 

planned by another agency; (3) 

materially altering the budgetary 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10301 

23 In section III of this preamble, some 

subsections have a heading listing one or two of the 

three Departments. In those subsections, the term 

‘‘Departments’’ generally refers only to the 

Departments listed in the heading. 

24This estimate is based upon internal 

Department of Labor calculations derived from the 

2009 Medical Expenditure Panel Survey. 

25See e.g., Kaiser Family Foundation and Health 

Research and Education Trust, Employer Health 

Benefits 2013 Annual Survey (2013) available at 

http://ehbs.kff.org/pdf/2013/8345.pdf. 

26Approximately 373,000 private sector 

employees and 87,000 State and local public sector 

employees. 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or (4) 

raising novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

These final regulations are not 

economically significant within the 

meaning of section 3(f)(1) of the 

Executive Order. However, OMB has 

determined that the actions are 

significant within the meaning of 

section 3(f)(4) of the Executive Order. 

Therefore, OMB has reviewed these 

final regulations, and the Departments 23

have provided the following assessment 

of their impact. 

1. Summary 

As stated earlier in this preamble, 

these final regulations implement PHS 

Act section 2708, which 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. A waiting 

period is defined to mean 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 final 

regulations generally apply to group 

health plans and group health insurance 

issuers for plan years beginning on or 

after January 1, 2015. 

The Departments have crafted these 

final regulations to secure the 

protections intended by Congress in an 

economically efficient manner. The 

Departments lack sufficient data to 

quantify the regulations’ economic cost 

or benefits; therefore, the proposed 

regulations provided a qualitative 

discussion of their economic impacts 

and requested detailed comment and 

data that would allow for quantification 

of the costs, benefits, and transfers. 

While comments were received 

expressing concern about the cost to 

employers that currently have waiting 

periods longer than 90 days of having to 

change their practices and provide 

coverage sooner to comply with the 90- 

day waiting period limitation, no 

comments provided additional data that 

would help in estimating the economic 

impacts of the final regulations. 

2. Estimated Number of Affected 

Entities 

The Departments estimate that 4.1 

million new employees receive group 

health insurance coverage through 

private sector employers and 1.0 million 

new employees receive group health 

insurance coverage through public 

sector employers annually.24 The 2013 

Kaiser Family Foundation and Health 

Research and Education Trust Employer 

Health Benefits Annual Survey (the 

‘‘2013 Kaiser Survey’’) finds that only 

nine percent of covered workers were 

subject to waiting periods of four 

months or more.25 If nine percent of 

new employees receiving health care 

coverage from their employers are 

subject to a waiting period of four 

months or more, then 459,000 new 

employees (5.1 million × 0.09) would 

potentially be affected by these 

regulations.26 However, it is unlikely 

that the survey defines the term 

‘‘waiting period’’ in the same manner as 

these final regulations. For example, 

waiting period may have been defined 

by reference to an employee’s start date, 

and it seems unlikely that the 2013 

Kaiser Survey would have included the 

clarifications included in these final 

regulations regarding the measurement 

period for variable-hour employees or 

the clarification regarding cumulative 

hours-of-service requirements. 

3. Benefits 

Before Congress enacted PHS Act 

section 2708, Federal law did not 

prescribe any limits on waiting periods 

for group health coverage. 

If employees delay health care 

treatment until the expiration of a 

lengthy waiting period, detrimental 

health effects could result, especially for 

employees and their dependents 

requiring higher levels of health care, 

such as older Americans, pregnant 

women, young children, and those with 

chronic conditions. This could lead to 

lower work productivity and missed 

school days. Low-wage workers also are 

vulnerable, because they have less 

income to spend out-of-pocket to cover 

medical expenses. The Departments 

anticipate that these final regulations 

can help reduce these effects. 

As discussed earlier in this preamble, 

these final regulations amend the 2004 

HIPAA regulations implementing Code 

section 9801, ERISA section 701, and 

PHS Act section 2701 (as originally 

added by HIPAA) to remove provisions 

superseded by the prohibition on 

preexisting conditions under PHS Act 

section 2704, added by the Affordable 

Care Act. These amendments would 

provide a benefit to plans by reducing 

the burden associated with complying 

with the several Paperwork Reduction 

Act (PRA) information collections that 

are associated with the superseded 

regulations. For a discussion of the 

affected information collections and the 

estimated cost and burden hour 

reduction, please see the PRA section, 

later in this preamble. 

4. Transfers 

The possible transfers associated with 

these final regulations would arise if 

employers begin to pay their portion of 

premiums or contributions sooner than 

they otherwise would in the absence of 

PHS Act section 2708 and these final 

regulations. Recipients of the transfers 

would be covered employees and their 

dependents who would, after these final 

regulations become applicable, not be 

subject to excessive waiting periods 

during which they must forgo health 

coverage, purchase COBRA 

continuation coverage, or obtain an 

individual health insurance policy—all 

of which are options that could lead to 

higher out-of-pocket costs for employees 

to cover their healthcare expenditures. 

As discussed above, Federal law did not 

limit the duration of waiting periods in 

the group market before the enactment 

of PHS Act section 2708. 

The Departments do not believe that 

these final regulations, on their own, 

will cause more than a marginal number 

of employers to offer coverage earlier to 

their employees. That is because a 

relatively small fraction of workers have 

waiting periods that exceed four months 

and these final regulations afford 

employers flexibility to maintain or 

revise their current group health plan 

eligibility conditions. For example, as 

described earlier, if a group health plan 

or group health insurance issuer 

conditions eligibility on the completion 

by an employee (part-time or full-time) 

of a number of cumulative hours of 

service, the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. Additionally, the 

final regulations allow for a reasonable 

and bona fide employment-based 

orientation period to be imposed as a 

condition for eligibility for coverage 

under a plan. These provisions are 

intended to provide plan sponsors with 

flexibility to continue the common 

practice of utilizing a probationary or 

trial period to determine whether a new 

employee will be able to handle the 


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duties and challenges of the job, while 

providing protections against excessive 

waiting periods for such employees. 

Under these final regulations, the plan’s 

waiting period must begin once the new 

employee satisfies the plan’s cumulative 

hours-of-service requirement or 

orientation period and may not exceed 

90 days. 

Because the 2013 Kaiser Survey 

reports that only nine percent of 

covered workers are in plans with 

waiting periods of four months or more 

and the overall average waiting period 

is only 1.8 months, the Departments are 

confident that such long waiting periods 

are rare. 

B. Paperwork Reduction Act 

1. Department of Labor and Department 

of the Treasury 

As described earlier in this preamble, 

these final regulations amend the 2004 

HIPAA regulations implementing Code 

section 9801, ERISA section 701, and 

PHS Act section 2701 (as originally 

added by HIPAA) to remove provisions 

superseded by the prohibition on 

preexisting conditions under PHS Act 

section 2704, added by the Affordable 

Care Act. 

The Departments are discontinuing 

the following Information Collection 

Requests (ICRs) that are associated with 

the superseded regulations: The Notice 

of Preexisting Condition Exclusion 

Under Group Health Plans, which is 

approved under OMB Control Number 

1210–0102 through January 31, 2016, 

and Establishing Creditable Coverage 

Under Group Health Plans, which is 

approved under OMB Control Number 

1210–0103 through January 31, 2016. 

Additionally, the Departments are 

revising Final Regulations for Health 

Coverage Portability for Group Health 

Plans and Group Health Insurance 

Issuers under HIPAA Titles I & IV, 

which is approved under OMB Control 

Number 1545–1537 through February 

28, 2014, to remove the Health Plans 

Imposing Pre-existing Condition 

Notification Requirements, Certification 

Requirements, and Exclusion Period 

Notification Information Collections 

within this ICR because they are 

associated with the superseded 

regulation. 

Discontinuing and revising these ICRs 

would result in a total burden reduction 

of approximately 341,000 hours (5,000 

hours attributable to OMB Control 

Number 1210–0102, 74,000 hours 

attributable to OMB Control Number 

1210–0103, and 262,000 hours 

attributable to OMB Control Number 

1545–1537) and a total cost burden 

reduction of approximately $32.7 

million ($1.1 million attributable to 

OMB Control Number 1210–0102, $12.4 

million attributable to OMB Control 

Number 1210–0103, and $19.2 million 

attributable to OMB Control Number 

1545–1537). 

2. Department of Health and Human 

Services 

These final regulations amend the 

2004 HIPAA regulations implementing 

Code section 9801, ERISA section 701, 

and PHS Act section 2701 (as originally 

added by HIPAA) to remove provisions 

superseded by the prohibition on 

preexisting conditions under PHS Act 

section 2704, added by the Affordable 

Care Act. 

HHS will discontinue the following 

ICRs that are associated with the 

superseded regulations, beginning 

January 1, 2015: The Notice of 

Preexisting Condition Exclusion and 

Certifications of Creditable Coverage 

under group health plans, which are 

approved under OMB Control Number 

0938–0702. 

Discontinuing these ICRs will result 

in a total annual burden reduction of 

approximately 2,908,569 hours and a 

total cost burden reduction of 

approximately $89.2 million. 

C. Regulatory Flexibility Act— 

Department of Labor and Department of 

Health and Human Services 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) applies to most 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.). 

Unless an agency certifies that such a 

rule will not have a significant 

economic impact on a substantial 

number of small entities, section 603 of 

the RFA requires the agency to present 

an initial regulatory flexibility analysis 

at the time of the publication of the 

notice of proposed rulemaking 

describing the impact of the rule on 

small entities. Small entities include 

small businesses, organizations and 

governmental jurisdictions. In 

accordance with the RFA, the 

Departments prepared an initial 

regulatory flexibility analysis at the 

proposed rule stage and requested 

comments on the analysis. No 

comments were received. Below is the 

Department’s final regulatory flexibility 

analysis and its certification that these 

final regulations do not have a 

significant economic impact on a 

substantial number of small entities. 

The Departments carefully considered 

the likely impact of the rule on small 

entities in connection with their 

assessment under Executive Order 

12866. The Departments lack data to 

focus only on the impacts on small 

business. However, the Departments 

believe that the final regulations include 

flexibility that would allow small 

employers to minimize the transfers in 

health insurance premiums that they 

would have to pay to employees. Based 

on the foregoing, the Departments 

hereby certify that these final 

regulations will not have a significant 

economic impact on a substantial 

number of small entities. 

D. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury, it has been determined that 

this final rule is not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It has also 

been determined that section 553(b) of 

the Administrative Procedure Act (5 

U.S.C. chapter 5) does not apply to these 

final regulations, and, because these 

final regulations do not impose a 

collection of information requirement 

on small entities, a regulatory flexibility 

analysis under the Regulatory 

Flexibility Act (5 U.S.C. chapter 6) is 

not required. Pursuant to Code section 

7805(f), this final rule has been 

submitted to the Small Business 

Administration for comment on its 

impact on small business. 

E. Congressional Review Act 

These final regulations are subject to 

the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and will be 

transmitted to the Congress and the 

Comptroller General for review. 

F. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, these final regulations do not 

include any Federal mandate that may 

result in expenditures by State, local, or 

tribal governments, or by the private 

sector, of $100 million or more adjusted 

for inflation ($141 million in 2013). 

G. Federalism Statement—Department 

of Labor and Department of Health and 

Human Services 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by Federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on the 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10303 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with State and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of State and local officials in 

the preamble to the regulation. 

In the Departments’ view, these final 

regulations have federalism 

implications, because they have direct 

effects on the States, the relationship 

between the national government and 

States, or on the distribution of power 

and responsibilities among various 

levels of government. In general, 

through section 514, ERISA supersedes 

State laws to the extent that they relate 

to any covered employee benefit plan, 

and preserves State laws that regulate 

insurance, banking, or securities. While 

ERISA prohibits States from regulating a 

plan as an insurance or investment 

company or bank, the preemption 

provisions of ERISA section 731 and 

PHS Act section 2724 (implemented in 

29 CFR 2590.731(a) and 45 CFR 

146.143(a)) apply so that the HIPAA 

requirements (including those of the 

Affordable Care Act) are not to be 

‘‘construed to supersede any provision 

of State law which establishes, 

implements, or continues in effect any 

standard or requirement solely relating 

to health insurance issuers in 

connection with group health insurance 

coverage except to the extent that such 

standard or requirement prevents the 

application of a requirement’’ of a 

federal standard. The conference report 

accompanying HIPAA indicates that 

this is intended to be the ‘‘narrowest’’ 

preemption of State laws. (See House 

Conf. Rep. No. 104–736, at 205, 

reprinted in 1996 U.S. Code Cong. & 

Admin. News 2018.) 

States may continue to apply State 

law requirements except to the extent 

that such requirements prevent the 

application of the Affordable Care Act 

requirements that are the subject of this 

rulemaking. State insurance laws that 

are more consumer protective than the 

Federal requirements are unlikely to 

‘‘prevent the application of’’ the 

Affordable Care Act, and therefore are 

unlikely to be preempted. Accordingly, 

States have significant latitude to 

impose requirements on health 

insurance issuers that are more 

restrictive than the Federal law. 

Guidance conveying this 

interpretation was published in the 

Federal Register on April 8, 1997 (62 FR 

16904), and December 30, 2004 (69 FR 

78720), and these final regulations 

clarify and implement the statute’s 

minimum standards and do not 

significantly reduce the discretion given 

the States by the statute. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy-making discretion of the 

States, the Departments have engaged in 

efforts to consult with and work 

cooperatively with affected State and 

local officials, including attending 

conferences of the National Association 

of Insurance Commissioners and 

consulting with State insurance officials 

on an individual basis. 

Throughout the process of developing 

these final regulations, to the extent 

feasible within the specific preemption 

provisions of HIPAA as it applies to the 

Affordable Care Act, the Departments 

have attempted to balance the States’ 

interests in regulating health insurance 

issuers, and Congress’ intent to provide 

uniform minimum protections to 

consumers in every State. By doing so, 

it is the Departments’ view that they 

have complied with the requirements of 

Executive Order 13132. 

IV. Statutory Authority 

The Department of the Treasury 

regulations are adopted pursuant to the 

authority contained in sections 7805 

and 9833 of the Code. 

The Department of Labor regulations 

are adopted pursuant to the authority 

contained in 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1185d, 1191, 1191a, 

1191b, and 1191c; sec. 101(g), Public 

Law 104–191, 110 Stat. 1936; sec. 

401(b), Public Law 105–200, 112 Stat. 

645 (42 U.S.C. 651 note); sec. 512(d), 

Public Law 110–343, 122 Stat. 3881; sec. 

1001, 1201, and 1562(e), Public Law 

111–148, 124 Stat. 119, as amended by 

Public Law 111–152, 124 Stat. 1029; 

Secretary of Labor’s Order 3–2010, 75 

FR 55354 (September 10, 2010). 

The Department of Health and Human 

Services regulations are adopted, with 

respect to 45 CFR Parts 144 and 146, 

pursuant to the authority contained in 

sections 2702 through 2705, 2711 

through 2723, 2791, and 2792 of the 

PHS Act (42 U.S.C. 300gg–1 through 

300gg–5, 300gg–11 through 300gg–23, 

300gg–91, and 300gg–92), and, with 

respect to 45 CFR Part 147, pursuant to 

the authority contained in sections 2701 

through 2763, 2791, and 2792 of the 

PHS Act (42 U.S.C. 300gg through 

300gg–63, 300gg–91, and 300gg–92), as 

amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 144 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

45 CFR Parts 146 and 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Approved: February 18, 2014. 

Mark J. Mazur, 

Assistant Secretary of the Treasury (Tax 

Policy). 

Signed this 12th day of February 2014. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

Dated: February 11, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: February 13, 2014. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

Accordingly, 26 CFR part 54 is 

amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for part 54 is amended by adding an 

entry for § 54.9815–2708 in numerical 

order to read in part as follows: 

Authority: 26 U.S.C. 7805. * * * 

Section 54.9815–2708 is also issued under 

26 U.S.C. 9833. 

* * * * * 

■ Par. 2. Section 54.9801–1 is amended 

by revising paragraph (b) to read as 

follows: 

§ 54.9801–1 Basis and scope. 

* * * * * 

(b) Scope. A group health plan or 

health insurance issuer offering group 


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10304 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

health insurance coverage may provide 

greater rights to participants and 

beneficiaries than those set forth in the 

portability and market reform sections 

of this part 54. This part 54 sets forth 

minimum requirements for group health 

plans and group health insurance 

issuers offering group health insurance 

coverage concerning certain consumer 

protections of the Health Insurance 

Portability and Accountability Act 

(HIPAA), including special enrollment 

periods and the prohibition against 

discrimination based on a health factor, 

as amended by the Patient Protection 

and Affordable Care Act (Affordable 

Care Act). Other consumer protection 

provisions, including other protections 

provided by the Affordable Care Act and 

the Mental Health Parity and Addiction 

Equity Act, are set forth in this part 54. 

* * * * * 

■ Par. 3. Section 54.9801–2 is amended 

by revising the definitions of 

‘‘enrollment date’’, ‘‘late enrollment’’, 

and ‘‘waiting period’’, and by adding 

definitions of ‘‘first day of coverage’’ 

and ‘‘late enrollee’’ in alphabetical 

order, to read as follows: 

§ 54.9801–2 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 

group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than on the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan; 

or through special enrollment. (For rules 

relating to special enrollment, see 

§ 54.9801–6.) If an individual ceases to 

be eligible for coverage under a plan, 

and then subsequently becomes eligible 

for coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period means waiting period 

within the meaning of § 54.9815– 

2708(b). 

* * * * * 

■ Par. 4. Section 54.9801–3 is amended 

by: 

■ A. Revising the section heading. 

■ B. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e), and (f). 

■ C. Revising the heading to paragraph 

(a). 

■ D. Removing the heading to paragraph 

(a)(1), and redesignating paragraphs 

(a)(1)(i) and (a)(1)(ii) as paragraphs (a)(1) 

and (a)(2). 

■ E. Amending newly designated 

paragraph (a)(2) by revising paragraph 

(ii) of Examples 1 and 2, by revising 

Example 3 and Example 4, and by 

revising paragraph (ii) of Examples 5, 6, 

7 and 8. 

■ F. Revising paragraph (b). 

The revisions read as follows: 

§ 54.9801–3 Preexisting condition 

exclusions. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market, depending 

on the essential health benefits benchmark 

plan as defined in 45 CFR 156.20). 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

(b) General rules. See section 2704 of 

the Public Health Service Act, 

incorporated into section 9815 of the 

Code, and its implementing regulations 

for rules prohibiting the imposition of a 

preexisting condition exclusion. 

■ Par. 5. Section 54.9801–4 is amended 

by removing paragraphs (a)(3) and (c), 

and revising paragraph (b) to read as 

follows: 

§ 54.9801–4 Rules relating to creditable 

coverage. 

* * * * * 


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(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

section 2704 of the Public Health 

Service Act, incorporated into section 

9815 of the Code, and its implementing 

regulations for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ Par. 6. Section 54.9801–5 is revised to 

read as follows: 

§ 54.9801–5 Evidence of creditable 

coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

section 2704 of the Public Health 

Service Act, incorporated into section 

9815 of the Code, and its implementing 

regulations for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

(b) Applicability. The provisions of 

this section apply beginning December 

31, 2014. 

■ Par. 7. Section 54.9801–6 is amended 

by removing paragraph (a)(3)(i)(E) and 

revising paragraphs (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i), and (d)(2) to read as 

follows: 

§ 54.9801–6 Special enrollment periods. 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 

(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 54.9802–1(d)) that 

includes the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ Par. 8. Section 54.9802–1 is amended 

by: 

■ A. Revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, paragraph (ii) of Example 5, and 

removing Example 8, in paragraph 

(b)(2)(i)(D). 

■ C. Removing paragraph (b)(3). 

■ D. Revising Example 2 and paragraph 

(i) of Example 5 in paragraph (d)(4). 

■ E. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ F. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 

§ 54.9802–1 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan, and a health 

insurance issuer offering health 

insurance coverage in connection with a 

group health plan, may not establish 

any rule for eligibility (including 

continued eligibility) of any individual 

to enroll for benefits under the terms of 

the plan or group health insurance 

coverage that discriminates based on 

any health factor that relates to that 

individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan or issuer may require 

the satisfaction of a deductible, 

copayment, coinsurance, or other costsharing requirement in order to obtain a 

benefit if the limit or cost-sharing 

requirement applies uniformly to all 

similarly situated individuals and is not 

directed at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 

requirements related to essential health 

benefits), the Americans With 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 


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the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

PHS Act section 2711 and its implementing 

regulations, if TMJ coverage is an essential 

health benefit, depending on the essential 

health benefits benchmark plan as defined in 

45 CFR 156.20. This example does not 

address whether the plan provision is 

permissible under any other applicable law, 

including PHS Act section 2711 or the 

Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under PHS Act section 2711 

and its implementing regulations because it 

imposes a lifetime limit on essential health 

benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 

enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer sponsors 

a group health plan that provides the same 

benefit package to all seven employees of the 

employer. Six of the seven employees have 

the same job title and responsibilities, but 

Employee G has a different job title and 

different responsibilities. After G files an 

expensive claim for benefits under the plan, 

coverage under the plan is modified so that 

employees with G’s job title receive a 

different benefit package that includes a 

higher deductible than in the benefit package 

made available to the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer sponsors 

a group health plan that generally is available 

to employees, spouses of employees, and 

dependent children until age 26. However, 

dependent children who are disabled are 

eligible for coverage beyond age 26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

■ Par. 9. Section 54.9815–2708 is added 

to read as follows: 

§ 54.9815–2708 Prohibition on waiting 

periods that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an individual can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, in 

that case, a plan or issuer will not be 

considered to have violated this 

paragraph (a) solely because individuals 

take, or are permitted to take, additional 

time (beyond the end of the 90-day 

waiting period) to elect coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is 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. If an individual enrolls as a 

late enrollee (as defined under 

§ 54.9801–2) or special enrollee (as 

described in § 54.9801–6), any period 

before such late or special enrollment is 

not a waiting period. 

(c) Relation to a plan’s eligibility 

criteria—(1) In general. Except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, being otherwise eligible 

to enroll under the terms of a group 

health plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification, achieving job-related 

licensure requirements specified in the 

plan’s terms, or satisfying a reasonable 

and bona fide employment-based 

orientation period). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular individual or class of 

individuals (including, for example, 

part-time employees). Instead, this 

section prohibits requiring otherwise 

eligible individuals to wait more than 

90 days before coverage is effective. See 

also section 4980H of the Code and its 

implementing regulations for an 

applicable large employer’s shared 

responsibility to provide health 

coverage to full-time employees. 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 

lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start date 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 


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waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date plus, if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Application to rehires. A plan or 

issuer may treat an employee whose 

employment has terminated and who 

then is rehired as newly eligible upon 

rehire and, therefore, required to meet 

the plan’s eligibility criteria and waiting 

period anew, if reasonable under the 

circumstances (for example, the 

termination and rehire cannot be a 

subterfuge to avoid compliance with the 

90-day waiting period limitation). 

(e) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 54.9801–2), including weekends and 

holidays. A plan or issuer that imposes 

a 90-day waiting period may, for 

administrative convenience, choose to 

permit coverage to become effective 

earlier than the 91st day if the 91st day 

is a weekend or holiday. 

(f) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment with job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working with job title L and 

therefore not in an eligible class of 

employees, is not part of a waiting period 

under this section. 

Example 3. (i) Facts. Same facts as in 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days; therefore, coverage under the 

plan must become effective no later than July 

10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage-on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days; therefore, 

coverage under the plan must become 

effective no later than December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 

Example 6. (i) Facts. Employer V’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date, which is January 28. Coverage 

is made effective 7 days later, February 4, 

which is the first day of the next pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of V’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective 

depends solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer W’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer W on November 

26 of Year 1. E’s hours are reasonably 

expected to vary, with an opportunity to 

work between 20 and 45 hours per week, 

depending on shift availability and E’s 

availability. Therefore, it cannot be 

determined at E’s start date that E is 

reasonably expected to work full-time. Under 

the terms of the plan, variable-hour 

employees, such as E, are eligible to enroll 

in the plan if they are determined to be a fulltime employee after a measurement period of 

12 months that begins on the employee’s start 

date. Coverage is made effective no later than 

the first day of the first calendar month after 

the applicable enrollment forms are received. 

E’s 12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of 

Year 3. 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided that (a) the period of 

time is no longer than 12 months; (b) the 

period of time begins on a date between the 

employee’s start date and the first day of the 

next calendar month (inclusive); (c) coverage 

is made effective no later than 13 months 

from E’s start date plus, if the employee’s 

start date is not the first day of a calendar 

month, the time remaining until the first day 

of the next calendar month; and (d) in 

addition to the measurement period, no more 

than 90 days elapse prior to the employee’s 

eligibility for coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer X 

on January 6 and is considered a part-time 

employee for purposes of X’s group health 

plan. X sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 

cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

Example 9. (i) Facts. 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 a 

specified number of hours of covered 

employment for multiple contributing 

employers. The plan aggregates hours in a 

calendar quarter and then, if enough hours 

are earned, coverage begins the first day of 

the next calendar quarter. The plan also 

permits coverage to extend for the next full 

calendar quarter, regardless of whether an 

employee’s employment has terminated. 

(ii) Conclusion. In this Example 9, these 

eligibility provisions are designed to 

accommodate a unique operating structure, 

and, therefore, are not considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation, and the plan 

complies with this section. 

Example 10. (i) Facts. Employee G retires 

at age 55 after 30 years of employment with 


emcdonald on DSK67QTVN1PROD with RULES3
10308 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

Employer Y with no expectation of providing 

further services to Employer Y. Three months 

later, Y recruits G to return to work as an 

employee providing advice and transition 

assistance for G’s replacement under a oneyear employment contract. Y’s plan imposes 

a 90-day waiting period from an employee’s 

start date before coverage becomes effective. 

(ii) Conclusion. In this Example 10, Y’s 

plan may treat G as newly eligible for 

coverage under the plan upon rehire and 

therefore may impose the 90-day waiting 

period with respect to G for coverage offered 

in connection with G’s rehire. 

(g) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the plan (and requires the plan 

sponsor to update this representation 

with any changes), and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(h) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Patient Protection and 

Affordable Care Act). See e.g., 

§ 54.9802–1, which prohibits 

discrimination in eligibility for coverage 

based on a health factor and section 

4980H, which generally requires 

applicable large employers to offer 

coverage to full-time employees and 

their dependents or make an assessable 

payment. 

(i) Applicability date. The provisions 

of this section apply for plan years 

beginning on or after January 1, 2015. 

See section 1251 of the Affordable Care 

Act, as amended by section 10103 of the 

Affordable Care Act and section 2301 of 

the Health Care and Education 

Reconciliation Act, and its 

implementing regulations providing that 

the prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and group health insurance 

issuers, including grandfathered health 

plans. 

§ 54.9831–1 [Amended] 

■ Par. 10. Section 54.9831–1 is 

amended by removing paragraph 

(b)(2)(i), and redesignating paragraphs 

(b)(2)(ii) through (b)(2)(viii) as (b)(2)(i) 

through (b)(2)(vii). 

Department of Labor 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

For the reasons stated in the 

preamble, the Department of Labor 

amends 29 CFR part 2590 as follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 11. The authority citation for Part 

2590 continues to read as follows: 

Authority: 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1185c, 1185d, 1191, 

1191a, 1191b, and 1191c; sec. 101(g), Pub. 

L.104–191, 110 Stat. 1936; sec. 401(b), Pub. 

L. 105–200, 112 Stat. 645 (42 U.S.C. 651 

note); sec. 512(d), Pub. L. 110–343, 122 Stat. 

3881; sec. 1001, 1201, and 1562(e), Pub. L. 

111–148, 124 Stat. 119, as amended by Pub. 

L. 111–152, 124 Stat. 1029; Secretary of 

Labor’s Order 3–2010, 75 FR 55354 

(September 10, 2010). 

■ 12. Section 2590.701–1 is amended by 

revising paragraph (b) to read as follows: 

§ 2590.701–1 Basis and scope. 

* * * * * 

(b) Scope. A group health plan or 

health insurance issuer offering group 

health insurance coverage may provide 

greater rights to participants and 

beneficiaries than those set forth in this 

Subpart B. This Subpart B sets forth 

minimum requirements for group health 

plans and group health insurance 

issuers offering group health insurance 

coverage concerning certain consumer 

protections of the Health Insurance 

Portability and Accountability Act 

(HIPAA), including special enrollment 

periods and the prohibition against 

discrimination based on a health factor, 

as amended by the Patient Protection 

and Affordable Care Act (Affordable 

Care Act). Other consumer protection 

provisions, including other protections 

provided by the Affordable Care Act and 

the Mental Health Parity and Addiction 

Equity Act, are set forth in Subpart C of 

this part. 

■ 13. Section 2590.701–2 is amended by 

revising the definitions of ‘‘enrollment 

date’’, ‘‘late enrollment’’, and ‘‘waiting 

period’’, and by adding definitions of 

‘‘first day of coverage’’ and ‘‘late 

enrollee’’ in alphabetical order, to read 

as follows: 

§ 2590.701–2 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 

group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than on the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan; 

or through special enrollment. (For rules 

relating to special enrollment, see 

§ 2590.701–6.) If an individual ceases to 

be eligible for coverage under a plan, 

and then subsequently becomes eligible 

for coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period means waiting period 

within the meaning of § 2590.715– 

2708(b). 

■ 14. Section 2590.701–3 is amended 

by: 

■ A. Revising the section heading. 

■ B. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e), and (f). 

■ C. Revising the heading to paragraph 

(a). 

■ D. Removing the heading to paragraph 

(a)(1), and redesignating paragraphs 

(a)(1)(i) and (a)(1)(ii) as paragraphs (a)(1) 

and (a)(2). 

■ E. Amending newly designated 

paragraph (a)(2) by revising paragraph 

(ii) of Examples 1 and 2, by revising 

Example 3 and Example 4, and by 

revising paragraph (ii) of Examples 5, 6, 

7 and 8. 

■ F. Revising paragraph (b). 

The revisions read as follows: 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10309 

§ 2590.701–3 Preexisting condition 

exclusions. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market, depending 

on the essential health benefits benchmark 

plan as defined in 45 CFR 156.20). 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

(b) General rules. See § 2590.715– 

2704 for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ 15. Section 2590.701–4 is amended by 

removing paragraphs (a)(3) and (c), and 

revising paragraph (b) to read as follows: 

§ 2590.701–4 Rules relating to creditable 

coverage. 

* * * * * 

(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

§ 2590.715–2704 for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

■ 16. Section 2590.701–5 is revised to 

read as follows: 

§ 2590.701–5 Evidence of creditable 

coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

§ 2590.715–2704 for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

(b) Applicability. The provisions of 

this section apply beginning December 

31, 2014. 

■ 17. Section 2590.701–6 is amended by 

removing paragraph (a)(3)(i)(E) and 

revising paragraphs (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i), and (d)(2) to read as 

follows: 

§ 2590.701–6 Special enrollment periods. 

* * * * * 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 

(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 2590.702(d)) that 

includes the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ 18. Section 2590.701–7 is revised to 

read as follows: 

§ 2590.701–7 HMO affiliation period as an 

alternative to a preexisting condition 

exclusion. 

The rules for HMO affiliation periods 

have been superseded by the 

prohibition on preexisting condition 

exclusions. See § 2590.715–2704 for 

rules prohibiting the imposition of a 

preexisting condition exclusion. 

■ 19. Section 2590.702 is amended by: 

■ A. Revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, paragraph (ii) of Example 5, and 

removing Example 8, in paragraph 

(b)(2)(i)(D). 

■ C. Removing paragraph (b)(3). 

■ D. Revising Example 2 and paragraph 

(i) of Example 5 in paragraph (d)(4). 

■ E. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ F. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 


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10310 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

§ 2590.702 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan, and a health 

insurance issuer offering health 

insurance coverage in connection with a 

group health plan, may not establish 

any rule for eligibility (including 

continued eligibility) of any individual 

to enroll for benefits under the terms of 

the plan or group health insurance 

coverage that discriminates based on 

any health factor that relates to that 

individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan or issuer may require 

the satisfaction of a deductible, 

copayment, coinsurance, or other costsharing requirement in order to obtain a 

benefit if the limit or cost-sharing 

requirement applies uniformly to all 

similarly situated individuals and is not 

directed at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 

requirements related to essential health 

benefits), the Americans with 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 

the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

§ 2590.715–2711, if TMJ coverage is an 

essential health benefit, depending on the 

essential health benefits benchmark plan as 

defined in 45 CFR 156.20. This example does 

not address whether the plan provision is 

permissible under any other applicable law, 

including PHS Act section 2711 or the 

Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under § 2590.715–2711 because 

it imposes a lifetime limit on essential health 

benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 

enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer sponsors 

a group health plan that provides the same 

benefit package to all seven employees of the 

employer. Six of the seven employees have 

the same job title and responsibilities, but 

Employee G has a different job title and 

different responsibilities. After G files an 

expensive claim for benefits under the plan, 

coverage under the plan is modified so that 

employees with G’s job title receive a 

different benefit package that includes a 

higher deductible than in the benefit package 

made available to the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10311 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer sponsors 

a group health plan that generally is available 

to employees, spouses of employees, and 

dependent children until age 26. However, 

dependent children who are disabled are 

eligible for coverage beyond age 26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

■ 20. Section 2590.715–2708 is added to 

read as follows: 

§ 2590.715–2708 Prohibition on waiting 

periods that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an individual can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, in 

that case, a plan or issuer will not be 

considered to have violated this 

paragraph (a) solely because individuals 

take, or are permitted to take, additional 

time (beyond the end of the 90-day 

waiting period) to elect coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is 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. If an individual enrolls as a 

late enrollee (as defined under 

§ 2590.701–2) or special enrollee (as 

described in § 2590.701–6), any period 

before such late or special enrollment is 

not a waiting period. 

(c) Relation to a plan’s eligibility 

criteria—(1) In general. Except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, being otherwise eligible 

to enroll under the terms of a group 

health plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification, achieving job-related 

licensure requirements specified in the 

plan’s terms, or satisfying a reasonable 

and bona fide employment-based 

orientation period). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular individual or class of 

individuals (including, for example, 

part-time employees). Instead, this 

section prohibits requiring otherwise 

eligible individuals to wait more than 

90 days before coverage is effective. See 

also section 4980H of the Code and its 

implementing regulations for an 

applicable large employer’s shared 

responsibility to provide health 

coverage to full-time employees. 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 

lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start date 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date plus, if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Application to rehires. A plan or 

issuer may treat an employee whose 

employment has terminated and who 

then is rehired as newly eligible upon 

rehire and, therefore, required to meet 

the plan’s eligibility criteria and waiting 

period anew, if reasonable under the 

circumstances (for example, the 

termination and rehire cannot be a 

subterfuge to avoid compliance with the 

90-day waiting period limitation). 

(e) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 2590.701–2), including weekends and 

holidays. A plan or issuer that imposes 

a 90-day waiting period may, for 

administrative convenience, choose to 

permit coverage to become effective 

earlier than the 91st day if the 91st day 

is a weekend or holiday. 

(f) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment with job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working with job title L and 

therefore not in an eligible class of 

employees, is not part of a waiting period 

under this section. 

Example 3. (i) Facts. Same facts as in 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days; therefore, coverage under the 

plan must become effective no later than July 

10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days; therefore, 

coverage under the plan must become 

effective no later than December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 


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10312 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

Example 6. (i) Facts. Employer V’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date, which is January 28. Coverage 

is made effective 7 days later, February 4, 

which is the first day of the next pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of V’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective 

depends solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer W’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer W on November 

26 of Year 1. E’s hours are reasonably 

expected to vary, with an opportunity to 

work between 20 and 45 hours per week, 

depending on shift availability and E’s 

availability. Therefore, it cannot be 

determined at E’s start date that E is 

reasonably expected to work full-time. Under 

the terms of the plan, variable-hour 

employees, such as E, are eligible to enroll 

in the plan if they are determined to be a fulltime employee after a measurement period of 

12 months that begins on the employee’s start 

date. Coverage is made effective no later than 

the first day of the first calendar month after 

the applicable enrollment forms are received. 

E’s 12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of Year 

3. 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided that (a) the period of 

time is no longer than 12 months; (b) the 

period of time begins on a date between the 

employee’s start date and the first day of the 

next calendar month (inclusive); (c) coverage 

is made effective no later than 13 months 

from E’s start date plus, if the employee’s 

start date is not the first day of a calendar 

month, the time remaining until the first day 

of the next calendar month; and (d) in 

addition to the measurement period, no more 

than 90 days elapse prior to the employee’s 

eligibility for coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer X 

on January 6 and is considered a part-time 

employee for purposes of X’s group health 

plan. X sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 

cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

Example 9. (i) Facts. 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 a 

specified number of hours of covered 

employment for multiple contributing 

employers. The plan aggregates hours in a 

calendar quarter and then, if enough hours 

are earned, coverage begins the first day of 

the next calendar quarter. The plan also 

permits coverage to extend for the next full 

calendar quarter, regardless of whether an 

employee’s employment has terminated. 

(ii) Conclusion. In this Example 9, these 

eligibility provisions are designed to 

accommodate a unique operating structure, 

and, therefore, are not considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation, and the plan 

complies with this section. 

Example 10. (i) Facts. Employee G retires 

at age 55 after 30 years of employment with 

Employer Y with no expectation of providing 

further services to Employer Y. Three months 

later, Y recruits G to return to work as an 

employee providing advice and transition 

assistance for G’s replacement under a oneyear employment contract. Y’s plan imposes 

a 90-day waiting period from an employee’s 

start date before coverage becomes effective. 

(ii) Conclusion. In this Example 10, Y’s 

plan may treat G as newly eligible for 

coverage under the plan upon rehire and 

therefore may impose the 90-day waiting 

period with respect to G for coverage offered 

in connection with G’s rehire. 

(g) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the plan (and requires the plan 

sponsor to update this representation 

with any changes), and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(h) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Patient Protection and 

Affordable Care Act). See e.g., 

§ 2590.702, which prohibits 

discrimination in eligibility for coverage 

based on a health factor and Code 

section 4980H, which generally requires 

applicable large employers to offer 

coverage to full-time employees and 

their dependents or make an assessable 

payment. 

(i) Applicability date. The provisions 

of this section apply for plan years 

beginning on or after January 1, 2015. 

See § 2590.715–1251 providing that the 

prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and group health insurance 

issuers, including grandfathered health 

plans. 

■ 21. Section 2590.731 by revising 

paragraph (c)(2) to read as follows: 

§ 2590.731 Preemption; State flexibility; 

construction. 

* * * * * 

(c) * * * 

(2) Exceptions. Only in relation to 

health insurance coverage offered by a 

health insurance issuer, the provisions 

of this part do not supersede any 

provision of State law to the extent that 

such provision requires special 

enrollment periods in addition to those 

required under section 701(f) of the Act. 

* * * * * 

§ 2590.732 [Amended] 

■ 22. Section 2590.732 is amended by 

removing paragraph (b)(2)(i), and 

redesignating paragraphs (b)(2)(ii) 

through (b)(2)(ix) as (b)(2)(i) through 

(b)(2)(viii). 

Department of Health and Human 

Services 

45 CFR Subtitle A 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR parts 

144, 146, and 147 as set forth below: 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10313 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

■ 23. The authority citation for part 144 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg through 300gg–63, 300gg–91, 

and 300gg–92). 

■ 24. Section 144.103 is amended by 

revising the definitions of ‘‘enrollment 

date’’, ‘‘late enrollment’’, and ‘‘waiting 

period’’, and by adding definitions of 

‘‘first day of coverage’’ and ‘‘late 

enrollee’’ in alphabetical order, to read 

as follows: 

§ 144.103 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 

group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than on the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan; 

or through special enrollment. (For rules 

relating to special enrollment and 

limited open enrollment, see § 146.117 

and § 147.104 of this subchapter.) If an 

individual ceases to be eligible for 

coverage under a plan, and then 

subsequently becomes eligible for 

coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period has the meaning given 

the term in 45 CFR 147.116(b). 

PART 146—REQUIREMENTS FOR THE 

GROUP HEALTH INSURANCE 

MARKET 

■ 25. The authority citation for part 146 

continues to read as follows: 

Authority: Secs. 2702 through 2705, 2711 

through 2723, 2791, and 2792 of the PHS Act 

(42 U.S.C. 300gg–1 through 300gg–5, 300gg– 

11 through 300gg–23, 300gg–91, and 300gg– 

92). 

■ 26. Section 146.101 is amended by 

revising paragraph (b)(1) to read as 

follows: 

§ 146.101 Basis and scope. 

* * * * * 

(b) * * * 

(1) Subpart B. Subpart B of this part 

sets forth minimum requirements for 

group health plans and group health 

insurance issuers offering group health 

insurance coverage concerning certain 

consumer protections of the Health 

Insurance Portability and 

Accountability Act (HIPAA), as 

amended, including special enrollment 

periods, prohibiting discrimination 

against participants and beneficiaries 

based on a health factor, and additional 

requirements prohibiting discrimination 

against participants and beneficiaries 

based on genetic information. 

* * * * * 

■ 27. Section 146.111 is amended by: 

■ A. Revising the section heading. 

■ B. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e), and (f). 

■ C. Revising the heading to paragraph 

(a). 

■ D. Removing the heading to paragraph 

(a)(1), and redesignating paragraphs 

(a)(1)(i) and (a)(1)(ii) as paragraphs (a)(1) 

and (a)(2). 

■ E. Amending newly designated 

paragraph (a)(2) by revising paragraph 

(ii) of Examples 1 and 2, by revising 

Example 3 and Example 4, and by 

revising paragraph (ii) of Examples 5, 6, 

7 and 8. 

■ F. Revising paragraph (b). 

The revisions read as follows: 

§ 146.111 Preexisting condition 

exclusions. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market, depending 

on the essential health benefits benchmark 

plan as defined in § 156.20 of this 

subchapter). 


emcdonald on DSK67QTVN1PROD with RULES3
10314 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

* * * * * 

(b) General rules. See § 147.108 of this 

subchapter for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ 28. Section 146.113 is amended by 

removing paragraphs (a)(3) and (c), and 

revising paragraph (b) to read as follows: 

§ 146.113 Rules relating to creditable 

coverage. 

* * * * * 

(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

§ 147.108 of this subchapter for rules 

prohibiting the imposition of a 

preexisting condition exclusion. 

■ 29. Section 146.115 is revised to read 

as follows: 

§ 146.115 Certification and disclosure of 

previous coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

§ 147.108 of this subchapter for rules 

prohibiting the imposition of a 

preexisting condition exclusion. 

(b) Applicability. The provisions of 

this section apply beginning December 

31, 2014. 

■ 30. Section 146.117 is amended by 

removing paragraph (a)(3)(i)(E) and 

revising paragraphs (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i), and (d)(2) to read as 

follows: 

§ 146.117 Special enrollment periods. 

* * * * * 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 

(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 146.121(d)) that includes 

the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ 31. Section 146.119 is revised to read 

as follows: 

§ 146.119 HMO affiliation period as an 

alternative to a preexisting condition 

exclusion. 

The rules for HMO affiliation periods 

have been superseded by the 

prohibition on preexisting condition 

exclusions. See § 147.108 of this 

subchapter for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ 32. Section 146.121 is amended by: 

■ A. Revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, paragraph (ii) of Example 5, and 

removing Example 8, in paragraph 

(b)(2)(i)(D). 

■ C. Removing paragraph (b)(3). 

■ D. Revising Example 2 and paragraph 

(i) of Example 5 in paragraph (d)(4). 

■ E. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ F. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 

§ 146.121 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan, and a health 

insurance issuer offering health 

insurance coverage in connection with a 

group health plan, may not establish 

any rule for eligibility (including 

continued eligibility) of any individual 

to enroll for benefits under the terms of 

the plan or group health insurance 

coverage that discriminates based on 

any health factor that relates to that 

individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan or issuer may require 

the satisfaction of a deductible, 

copayment, coinsurance, or other costsharing requirement in order to obtain a 

benefit if the limit or cost-sharing 

requirement applies uniformly to all 

similarly situated individuals and is not 

directed at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10315 

requirements related to essential health 

benefits), the Americans with 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 

the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

§ 147.126 of this subchapter, if TMJ coverage 

is an essential health benefit, depending on 

the essential health benefits benchmark plan 

as defined in § 156.20 of this subchapter. 

This example does not address whether the 

plan provision is permissible under any other 

applicable law, including PHS Act section 

2711 or the Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under § 147.126 of this 

subchapter because it imposes a lifetime 

limit on essential health benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 

enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer sponsors 

a group health plan that provides the same 

benefit package to all seven employees of the 

employer. Six of the seven employees have 

the same job title and responsibilities, but 

Employee G has a different job title and 

different responsibilities. After G files an 

expensive claim for benefits under the plan, 

coverage under the plan is modified so that 

employees with G’s job title receive a 

different benefit package that includes a 

higher deductible than in the benefit package 

made available to the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer sponsors 

a group health plan that generally is available 

to employees, spouses of employees, and 

dependent children until age 26. However, 

dependent children who are disabled are 

eligible for coverage beyond age 26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

■ 33. Section 146.143 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 146.143 Preemption; State flexibility; 

construction. 

* * * * * 

(c) * * * 

(2) Exceptions. Only in relation to 

health insurance coverage offered by a 

health insurance issuer, the provisions 

of this part do not supersede any 

provision of State law to the extent that 

such provision requires special 

enrollment periods in addition to those 

required under section 2702 of the Act. 

* * * * * 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 34. The authority citation for part 147 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg through 300gg–63, 300gg–91, 

and 300gg–92), as amended. 

■ 35. Section 147.116 is added to read 

as follows: 

§ 147.116 Prohibition on waiting periods 

that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an individual can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, in 

that case, a plan or issuer will not be 

considered to have violated this 

paragraph (a) solely because individuals 

take, or are permitted to take, additional 

time (beyond the end of the 90-day 

waiting period) to elect coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is 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. If an individual enrolls as a 

late enrollee (as defined under § 144.103 

of this subchapter) or special enrollee 

(as described in § 146.117 of this 

subchapter), any period before such late 

or special enrollment is not a waiting 

period. 

(c) Relation to a plan’s eligibility 

criteria—(1) In general. Except as 


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provided in paragraphs (c)(2) and (c)(3) 

of this section, being otherwise eligible 

to enroll under the terms of a group 

health plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification, achieving job-related 

licensure requirements specified in the 

plan’s terms, or satisfying a reasonable 

and bona fide employment-based 

orientation period). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular individual or class of 

individuals (including, for example, 

part-time employees). Instead, this 

section prohibits requiring otherwise 

eligible individuals to wait more than 

90 days before coverage is effective. See 

also section 4980H of the Code and its 

implementing regulations for an 

applicable large employer’s shared 

responsibility to provide health 

coverage to full-time employees. 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 

lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start date 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date plus, if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Application to rehires. A plan or 

issuer may treat an employee whose 

employment has terminated and who 

then is rehired as newly eligible upon 

rehire and, therefore, required to meet 

the plan’s eligibility criteria and waiting 

period anew, if reasonable under the 

circumstances (for example, the 

termination and rehire cannot be a 

subterfuge to avoid compliance with the 

90-day waiting period limitation). 

(e) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 144.103), including weekends and 

holidays. A plan or issuer that imposes 

a 90-day waiting period may, for 

administrative convenience, choose to 

permit coverage to become effective 

earlier than the 91st day if the 91st day 

is a weekend or holiday. 

(f) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment with job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working with job title L and 

therefore not in an eligible class of 

employees, is not part of a waiting period 

under this section. 

Example 3. (i) Facts. Same facts as in 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days; therefore, coverage under the 

plan must become effective no later than July 

10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days; therefore, 

coverage under the plan must become 

effective no later than December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 

Example 6. (i) Facts. Employer V’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date, which is January 28. Coverage 

is made effective 7 days later, February 4, 

which is the first day of the next pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of V’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective 

depends solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer W’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer W on November 

26 of Year 1. E’s hours are reasonably 

expected to vary, with an opportunity to 

work between 20 and 45 hours per week, 

depending on shift availability and E’s 

availability. Therefore, it cannot be 

determined at E’s start date that E is 

reasonably expected to work full-time. Under 

the terms of the plan, variable-hour 

employees, such as E, are eligible to enroll 

in the plan if they are determined to be a fulltime employee after a measurement period of 

12 months that begins on the employee’s start 

date. Coverage is made effective no later than 

the first day of the first calendar month after 

the applicable enrollment forms are received. 

E’s 12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of Year 

3. 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Rules and Regulations 10317 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided that (a) the period of 

time is no longer than 12 months; (b) the 

period of time begins on a date between the 

employee’s start date and the first day of the 

next calendar month (inclusive); (c) coverage 

is made effective no later than 13 months 

from E’s start date plus, if the employee’s 

start date is not the first day of a calendar 

month, the time remaining until the first day 

of the next calendar month; and (d) in 

addition to the measurement period, no more 

than 90 days elapse prior to the employee’s 

eligibility for coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer X 

on January 6 and is considered a part-time 

employee for purposes of X’s group health 

plan. X sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 

cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

Example 9. (i) Facts. 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 a 

specified number of hours of covered 

employment for multiple contributing 

employers. The plan aggregates hours in a 

calendar quarter and then, if enough hours 

are earned, coverage begins the first day of 

the next calendar quarter. The plan also 

permits coverage to extend for the next full 

calendar quarter, regardless of whether an 

employee’s employment has terminated. 

(ii) Conclusion. In this Example 9, these 

eligibility provisions are designed to 

accommodate a unique operating structure, 

and, therefore, are not considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation, and the plan 

complies with this section. 

Example 10. (i) Facts. Employee G retires 

at age 55 after 30 years of employment with 

Employer Y with no expectation of providing 

further services to Employer Y. Three months 

later, Y recruits G to return to work as an 

employee providing advice and transition 

assistance for G’s replacement under a oneyear employment contract. Y’s plan imposes 

a 90-day waiting period from an employee’s 

start date before coverage becomes effective. 

(ii) Conclusion. In this Example 10, Y’s 

plan may treat G as newly eligible for 

coverage under the plan upon rehire and 

therefore may impose the 90-day waiting 

period with respect to G for coverage offered 

in connection with G’s rehire. 

(g) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the plan (and requires the plan 

sponsor to update this representation 

with any changes), and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(h) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Patient Protection and 

Affordable Care Act). See e.g., § 146.121 

of this subchapter and § 147.110, which 

prohibits discrimination in eligibility 

for coverage based on a health factor 

and Code section 4980H, which 

generally requires applicable large 

employers to offer coverage to full-time 

employees and their dependents or 

make an assessable payment. 

(i) Applicability date. The provisions 

of this section apply for plan years 

beginning on or after January 1, 2015. 

See § 147.140 providing that the 

prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and group health insurance 

issuers, including grandfathered health 

plans. 

[FR Doc. 2014–03809 Filed 2–20–14; 11:15 am] 

BILLING CODE 4830–01– 4510–029– 4120–01–6325–64–P 


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