California Repeals 60-Day Limit on Waiting Periods

March 2017

On August 15, 2014, California passed Senate Bill 1034, which repealed an insurance law (Assembly Bill 1083) that prohibited insurance companies from including waiting periods in excess of 60 days in their group health insurance contracts. The new law, effective January 1, 2015, prohibits California insurance companies from applying any "waiting or affiliation period" under a group or individual health benefit plan.

So where does that leave California employers, who are permitted under federal law (the ACA) to have a one-month orientation period and up to a 90-day waiting period? They'll be able to continue applying ACA-compliant orientation periods and waiting periods, as the law prohibits carriers-but not employers-from imposing a waiting period. Therefore, the new California law aligns with the ACA and allows insurance carriers in California to administer enrollment in accordance the employer's ACA-compliant orientation period and/or waiting period. It does, however, prohibit carriers from imposing a separate affiliation or waiting period in addition to any imposed by the employer.

The new law is intended to eliminate confusion between the state and federal rules governing health care enrollment waiting periods. Employers operating in multiple states will be able to have consistent waiting periods for employees in different states, if desired, which will make it easier to determine when a new hire or otherwise newly eligible employee must be enrolled in a health care plan.

Employers need to continue to monitor new developments and implement strategies for complying with the ACA. To learn more about the impact of this and other health care reform decisions, please visit Peel & Holland University, where we have posted a document titled California Repeals 60-Day Limit on Waiting Periods.

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