When do employees become covered by a health plan?
Employees generally become covered on the effective date of the plan if they are actively at work on that day. If they are absent on the first day that the plan is in effect, they become covered the next day that they are actively at work. An insurer may agree to cover all employees on the plan's effective date even if they are on vacation, on leave, not scheduled to work that day, absent due to illness, or on temporary layoff.
Waiting period. New employees enrolling in an existing plan typically have to work a specified period of time or number of hours on a regular basis before becoming eligible for coverage. This waiting period varies in length from employer to employer but is often around three months.
Once an employee is eligible for the plan, the employee usually has a limited time period in which to enroll. An employee or eligible family member who does not enroll when first eligible, but later chooses to join the plan, may have to undergo a medical examination, and may not be covered for preexisting conditions.
Can an employer have different waiting periods for HMOs and PPOs? Your employer's HMO plan imposes a 60-day waiting period for coverage, but coverage under the PPO is not available until one year of service. Can waiting periods differ for the same employer?
- Yes. HIPAA limits the waiting period for HMOs, but not other types of health care plans. In general, the need for health care coverage dictates that waiting periods should be short, normally no more than three months after employment for new hires. Many plans provide for immediate coverage or for coverage on the first of the month following the month of employment. HIPAA does not limit a waiting period, except for health maintenance organizations.
- Under HIPAA, HMOs may require an affiliation period (in effect a waiting period for actual coverage) instead of a preexisting condition exclusion as long as the affiliation period is applied uniformly regardless of any health status-related factors and is limited to two months (three for late enrollees). The affiliation period begins on the enrollment date and runs concurrently with any waiting period. During the affiliation period, the HMO is not required to provide benefits nor is it allowed to charge a premium.
Dependent coverage. Dependent coverage usually begins with the enrollment of the employee so that when the employee receives coverage, so do eligible dependents whom the employee has enrolled. An employee may be required to provide evidence of insurability in order to cover dependents who are not initially covered, unless the dependent is a newborn infant.
Adopted children. Group health plans that provide coverage for dependent children must treat children placed with participants or beneficiaries for adoption in the same manner as natural children. This rule applies from the time the child is placed for adoption, even if that placement ultimately fails to result in an adoption. In addition, at the time the child is placed for adoption and becomes covered under a participant's health plan, the plan may not restrict coverage solely on the basis of a preexisting condition of the child.