Basically, a waiting period is the period of time an employee must wait before health care coverage begins. While that seems simple enough on the surface, there are many different types of waiting periods. Each type of waiting period comes with its own set of rules, and each will affect the group health insurance plan differently. There are three primary types of waiting periods that occur in group health insurance plans: employer waiting periods, pre-existing condition exclusion periods, and affiliation periods.
Employer Waiting Periods: These are the most common type of waiting period for a group health insurance plan. This is the time that all new employees must wait, usually within three months, before they become eligible to participate in your company’s group health insurance plan. As the employer, you will determine the waiting period required. This type of waiting period is usually to avoid so-called “hit and run” claims, where an employee takes a job just to get health care coverage, files a large claim, and then quickly leaves the company. It can also reduce your paperwork, letting you avoid spending time enrolling an employee in the plan before determining if they are going to work out in the position.
Pre-existing Condition Exclusion Period: This waiting period only affects employees who have a pre-existing condition, such as asthma or diabetes, and only if they have had a lapse in prior coverage for at least 63 days. A pre-existing condition waiting period means that the employee’s health insurance coverage can be excluded or limited for a pre-existing condition during this time. The length of the waiting period usually varies from as little as one month to as much as 18 months. If the employee can prove that he has had uninterrupted insurance before joining your company’s group health insurance plan, the waiting period is waived. The new health insurance plan cannot impose a pre-existing condition waiting period if the employee has had a least one year of continuous coverage without a break in coverage of at least 63 days.
Affiliation Period: An affiliation period is one that is imposed by the HMO, not by the employer. Different HMOs have different rules for the affiliation period, but the waiting period cannot exceed three months. This waiting period is imposed for the same reason as the employer waiting periods, to reduce unnecessary paper work and avoid “hit and run” claims, but it’s set by the HMO.