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Orientation period could benefit employers dealing with health coverage

The IRS recently issued guidance intended to ease the administrative burden of offering group health coverage within 90 days of an employee’s hire date.

This “land mine” under the “Affordable Care Act” created problems with compliance because most employers use irregular hire dates, so waiting 90 days from the date of hire ran the risk of violating one of the “shared responsibility” provisions.

Employers are being allowed to have an “orientation period” that can be construed as an evaluation period or part of any training processes from the date of hire for a period of no longer than one month It can even be for different classes of employees, and still offer coverage, for those eligible, following the 90-day waiting period.

An example would be, you hire someone on June 15 who is expected to work 30 hours per week and is thus considered full-time. Their employment-based “orientation period” could be from June 15 to July 14.

However, the employer still has to offer coverage to this eligible employee following the 90-day waiting period. So, in this instance, the employee works through the end of June, is still in his “orientation period,” but would be eligible for coverage Oct. 1.

This “orientation period” is also effective for employers who are implementing a health plan and are having difficulty complying with some of the new insurer underwriting requirements.

It is critical, however, that employers reference any “orientation period” in their employee communications, which would include their Summary Plan Description and plan documents. In addition, they need to refrain from using it as a deterrent to offering coverage as well.

— Henry GrosJean has been an independent broker since 1979 and has been a long-time small-business advocate.

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