Is it possible that the Cadillac Tax will be a major health spending cost ‘deflator’?
Many employers made changes to their group medical insurance waiting period to conform to Patient Protection and Affordable Care Act (PPACA) requirements. The Federal requirement is that the group medical insurance waiting period not exceed 90 days with coverage to be effective on the 91st day. A ‘first of the month following 90 days’ strategy would create a waiting period practice that violated requirements in most cases.
California instituted a more stringent waiting period requirement of no greater than 60 days with coverage to be effective on the 61st day. Therefore, the most common waiting period change adopted by employers became the 1st of the month following 30 days so as not to potentially violate the 61st day coverage-in-effect requirement.
Understandably, this has had a major impact on employers that have new-hire employee evaluation periods of longer than 30 or 60 days. Due to the nature of some job requirements and employee performance standards, this shorter waiting period means that employers may take on additional cost for employees who are ultimately found not to be a good fit for the position.
The good new is that a new ‘Orientation Period’ of up to one month may now precede the waiting period.
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