Health Insurance Waiting Period: What You Should Know

A health insurance waiting period is the period of time that’s between the day you sign up for a coverage and the day that coverage starts. It is one insurance term that befogs almost more new hires and first-time buyers than any other.

So you apply for a position, complete the paperwork and then discover you can’t get your new benefits until later. It may seem like a strange concept to you, but that hole can be perplexing, particularly when you’re accustomed to thinking that insurance begins when you make a yes call.

Not always is it so. If you have to get care within that time frame, you don’t want to be hit with a costly surprise because you know exactly why and how much time to expect.

This guide covers all situations that involve a waiting period: new jobs, ACA marketplace plans, short-term, dental add-ons, and Medicare. You’ll also learn what you can do legally to speed up and/or bypass the waiting period altogether.

But, what exactly is a health insurance waiting period?

In essence, a waiting period is a period of time you must enroll (or be employed) in advance of your health plan picking up coverage on claims. This is not like waiting periods for certain pre-existing conditions, also known as a “pre-existing condition exclusion” which applies only to conditions you had prior to coverage beginning. While most people use the two terms interchangeably, they are not synonymous, and many people have a misunderstanding of them.

Actually, there are three different timers that can be used prior to your complete coverage:

• The waiting period to be eligible. Wait times to enroll before you start working at a place or have a policy.
• The waiting period prior to the effective date of coverage of a plan. The time it takes from enrollee to plan being live.
• The waiting time for the condition-specific condition. The time lapse between when the claim happens (such as for a major dental service or a pregnancy claim on an older plan) and it is covered.

After separating these three, the remainder of this is much easier to follow.

What is the point of waiting periods if that’s the case?

Insurers don’t do it in order to be mean. A plan will only work if it spreads the risk among a large number of people who contribute regularly and for most of whom, large claims are not made each month.

People would be able to enroll on the day before big surgery and cancel on the day of the surgery – and premiums would skyrocket for all the others. Preventive care is almost always covered right away, and larger procedures are not, in part because of waiting periods to discourage that type of short-term, high cost enrollment.

There are, however, federal regulations that restrict the extent to which insurers can go. Pre-existing condition waiting periods were replaced by a hard cap on waiting period for ACA-compliant plans, and a hard cap on waiting period for employer plans under the Affordable Care Act. Let’s say how this is applied in practice.

Employer-Sponsored Health Insurance: The 90-Day Rule!

Under federal law, for those who obtain health insurance through their employers, there is a limit of 90 calendar days on the waiting period. Group health plans and insurers that provide coverage to an employer may not condition coverage on an employee or dependent being insured for a longer time than that.

For employers, regardless of their size, this is true even in the case of federal guidance on the 90-day rule as it applies to them.

Here are some details that are important:

• 90 days are not only business days, they include weekends and holidays.
• The countdown begins the day after you meet the basic requirements of the plan – such as being full-time – and you become “otherwise eligible.”
• Employers are allowed to provide an orientation period of up to 1 month prior to the 90 day period, so in certain situations the period from when you start working until the 1st day of coverage may be as long as 4 months.
• There is no requirement for employers to have any waiting period. There are many companies that provide coverage from day one or you can choose to have it start on the 1st of the month after 30 or 60 days.

Some employers also have a rule that employees need to have “cumulative hours” of employment, which is typical in the retail or hospitality industry with part-time, seasonal or variable hours workers. There, it may take up to 1,200 logged hours before you qualify and 90 days may only begin once you qualify.

Don’t use your hire date for open enrollment dates, as they will be listed on the paper you signed when you were hired. If you’re not sure, request in writing the precise date you will be effective from HR.

Pre-existing conditions will be covered by ACA Marketplace Plans.

So many folks sit up a little here since the news here is very good indeed. Federal marketplace guidance confirms marketplace plans cannot deny, delay or charge more for coverage of a pre-existing condition under the Affordable Care Act (ACA).

No waiting period applies to a condition being covered under the plan, such as: diabetes, asthma, past cancer treatment or mental health diagnosis.

This protection has not been in place in the past. Prior to the ACA, medical underwriting was a common practice for insurance companies to deny or condition coverage on any known health-related issue and pregnancy was often considered a pre-existing condition.

For all those ACA-compliant plans sold on the healthcare marketplace or off the marketplace—from most employer plans—the ACA filled that gap.

But there is a practical waiting period with marketplace plans, too: The time between enrollment and the start of coverage typically is the first of the next month.

First, you would likely have to have a qualifying life event such as losing job coverage, getting married, or having a baby to open up a special enrollment period to enroll outside of open enrollment.

Short-Term Health Insurance Waiting Periods

People are typically the ones who are misled by short term health plans, and it’s because they’re playing by a different set of rules. These plans do not have to comply with ACA (Obamacare) and may therefore bar coverage for pre-existing conditions – sometimes for good – rather than simply delaying coverage for pre-existing conditions.

A few things to know if you’re considering a short-term plan:

• Coverage for pre-existing conditions can be excluded entirely, not just delayed.
• General coverage often starts fast, sometimes within a few days to a month of applying.
• Essential health benefits that ACA plans must cover, including maternity care, mental health treatment, and prescription drugs, may not be included at all.
• Some states have restricted or banned short-term plans specifically because of these gaps, so availability depends on where you live.
• If you let a short-term policy lapse and buy a new one later, conditions that developed during the first term generally won’t be covered under the new one either.

Short-term coverage may be appropriate for a limited number of cases: a brief time between jobs or the first year of a new comprehensive plan. If you have a chronic condition, or anticipate frequent care, it’s a bad replacement for continuous coverage.

Dental, vision and other ancillary waiting periods.

While most people focus on the health insurance waiting period, there is a dental and vision waiting period too—these may be different, and you should know them if you have them.

Everything from routine exams to cleaning is almost always covered the same day as treatment. Simple fillings and simple extractions will have a 3 to 6 month wait.

Most major work, such as crowns, bridges, root canals, dentures etc. take 6-12 months to complete and orthodontic treatment is often the longest of those and is usually the last to be covered, 12-24 months.

One thing that really makes things easier: dental carriers often do not require waiting periods for basic and major dental care services if they can document prior dental coverage for at least 63 days without any lapse in coverage. So it’s important to ask your new insurance company if this is something you have to wait from scratch.

Waiting periods and Medicare.

Medicare has a waiting period, too – and it’s not related to pre-existing conditions as it is with private insurance. The waiting period for care eligibility is usually 24 months from the date you begin receiving Social Security disability benefits, unless you become disabled at age 65 or older, or your disability is one of the exceptions to the wait (such as ALS).

Medigap (Medicare Supplement) Plans are different yet. Medical underwriting and waiting periods may apply, and coverage might be denied if you have a health history, if you are outside of the six-month Medigap open enrollment period, which begins the first time you enroll in Part B at age 65.

Making sure you don’t have a coverage gap: COBRA and Special Enrollment

There are two viable options for getting covered without a gap if you’re between jobs and don’t want to work for a period of months without health insurance.

• COBRA continuation coverage provides temporary continuation of the employer’s plan at the same cost as before (plus an administrative fee), when you leave the job. There is no waiting period as you are building on the same plan.
• The SEP is a 60-day window in the marketplace to purchase a marketplace plan that begins when you lose the coverage from a job plan, allowing you to buy a marketplace plan without having to wait for the next open enrollment window.
• Since there is no waiting period for Medicaid, and Medicaid is available year-round, it isn’t as big of a concern if your income dips in between jobs.

What are the ways to avoid or minimize the waiting period for health insurance?

While it’s impossible to negotiate away a statutorily required waiting period, there are a few ways to reduce the “real-life” waiting period.

Advantages to delay until full employer coverage:

• Generally, a lower cost than short term or individual plans.
• Greater network and negotiated rates.
• No coverage limits are put in place after coverage begins for pre-existing conditions.

Problems with waiting for full employer coverage:

• If something goes wrong while you’re waiting, you have to cover all of your expenses out of pocket.
• There may be long periods of orientation during the actual wait.
• Even when you have an on-going prescription or treatment, you may need a bridge plan.

If you’re in a definite shortfall, ask your new employer if the coverage gap can be filled by having them waive part of the waiting period, which is a common practice in competitive hiring situations; determine if a marketplace plan with a qualifying event is the better option than a short-term policy; and, if dental and vision coverage are important, ask about coverage before you enroll, because some marketplace plans may offer coverage for prior events.

Frequently Asked Questions