What Is a Waiting Period?
A waiting period in the realm of health insurance simply refers to the amount of time you have to wait between enrolling in your health insurance policy, and your benefits to kick in.
Since the passage of the Affordable Care Act, most health insurance waiting periods are limited to 90 days. If there is a job change, for example, you will typically have to wait 90 days before you will be able to utilize your employer's health insurance plan. However, there are more specific time restrictions called exclusion, employer and affiliation waiting periods, and they each impose different restrictions and time periods.
Purpose of a Waiting Period
Waiting periods exist primarily to protect the insurance company from someone who simply signs up for health insurance only because they need a particular condition covered, or they need quick coverage due to a recent injury. The insurance company wants to know who they’re insuring to properly rate the risk.
How Long Are the Waiting Periods?
Employers can make their own decisions about how long periods can last. However, the maximum wait time allowed for employer-based coverage is 90 days.
Types of Waiting Periods
Exclusion Waiting Period
For those who enroll in a new health plan with a pre-existing condition, the insurer may impose an exclusion period for that condition. The wait time is predetermined, and they can be included as part of a group plan or an individual plan. The exclusion waiting period can be avoided if you’ve been insured by a plan for more than 18 months or if you have not been without health insurance for more than 63 days.
Employer Waiting Period
An employer waiting period states that a newly hired employee must wait a given time period before they can take advantage of the group health insurance plan. Waits are usually 90 days. However, some employers can choose to grant a smaller wait time. These holds are important in keeping costs down for the group because they limit the possibility of a new hire filing a large claim after starting with the company and then leaving. Claims like that can have a tremendous impact on how expensive premiums are for the rest of the group.
The affiliation period is imposed by group HMOs rather than the employer. The waiting times are restricted by HIPAA to no more than two months, and the HMO cannot enforce an exclusion waiting period for pre-existing conditions in addition to the affiliation period.