Team Management

The 90-Day Probationary Period for New Hire Health Insurance: An Employer’s Guide

Lauren Humphrey Licensed insurance broker 
Businesswomen discussing in meeting sitting on desk.

The 90-day probationary period (aka employer waiting period) for new employees might look like just another term in the game of jargon gymnastics. But when a new hire joins your team, it’s really important to understand all the ins and outs of this key concept.

Rolled out by the Affordable Care Act (ACA) in 2014, the federal law states that companies offering health insurance coverage must make it available to employees within a 90-day period of time after they start. That employment rule sounds simple enough, right? Not so fast.

This article will explain why you should care about the probation period, what it takes to comply, and how to use the time frame to underscore the values your small business or company believes in.

What is the 90-day probation period?

In essence, the 90-day probation period is a block of time your employees starting new jobs with you have to wait before health coverage kicks in. It streamlines access to benefits by preventing your team from having to wait forever before receiving insurance.

Why does it matter?

To start, you need to know about the 90-day time period because you have to stick to it. When onboarding a new teammate, it’s important for human resources or you to tell them the exact date their coverage begins. If insurance is activated after their first day, knowing that simple fact will help them prevent a lapse in coverage for themselves and their families.

The trial period is also a meaningful way to reinforce your company culture and employment relationships—the same one that attracted your employee to the new position at your company in the first place. Whether it’s feeling more relaxed on that first daunting day or not having to worry about all the splintery details that go into enrolling in benefits, you want people to feel like they’re being taken care of whenever they interact with you. A warm welcome also helps people feel more in control at a time when things are already so new and tumultuous.

And finally, you can wield it as a tool. If you have a company that has high turnover, you may consider lengthening the waiting period closer to the 90-day upper limit, since it is easier to terminate employees (and avoid wrongful termination lawsuits) during this introductory period if they don’t meet the expectations noted in job descriptions. But if the opposite situation is true, it may be wise to begin benefits right after your new team member starts.

How long should I wait?

90 days is the maximum amount of eligibility time you can wait before activating your probationary employee’s health benefits. However, showing your team that you truly care about their well-being means never (ever) waiting until the last minute, so share your company policies and employee handbook as early as possible.

Pro tip: The Gusto team of benefits advisors recommends that you begin coverage within one month after your new hire starts.

Whether or not this is feasible depends on your carrier, so make sure you identify the earliest possible date that you can set up your employee on the company plan. You can surface this information by visiting your carrier’s website or by asking your health insurance broker directly.

Can I have different waiting periods for different groups of employees?

Yes! You can assign different waiting periods to different groups in your company. The only caveat is that you need to make sure each group is treated in the same way and officially established as a non-discriminatory class of employees in your benefits plan. For example, if you have a different waiting period for hourly workers, that would fit the bill.

Do the 90 days include work days, calendar days, or something else entirely?

Under the law, the 90 days are just that—90 consecutive calendar days. That means weekends and holidays are swept up in the final count. If the 91st day falls on a non-workday, coverage needs to be switched on before that day or on the exact weekend or holiday the 91st falls on.

Pro tip: 90 days does not equal three months. There are a few other mentions of a three-month waiting period in the ACA, but it’s referring to a completely different thing.

What if my employee needs coverage ASAP?

Because of the individual insurance mandate, your new team member should already have coverage. If they don’t, load them up with the following resources to help them get the insurance they need until the company insurance kicks in:

  • Marketplace plan: Thought your team could only sign up for health insurance during open enrollment? Since losing insurance is a qualifying life event (QLE), they can enroll through something called a special enrollment period. Your employee can see if they qualify directly on the website .
  • COBRA: If your worker qualified for COBRA insurance from their previous job, they may still be able to receive coverage through the program’s group plan.
  • Interim health insurance: Short-term insurance plans usually don’t satisfy many of the ACA requirements. However, it can be a good fill gap if neither COBRA or a Marketplace plan are options.
  • Good things come to those who know about the waiting period. Best practices include fully communicating employment status and how employee performance will be evaluated (such as with performance reviews) during the probationary days of employment. Also cover what this means for time off and sick leave. You may even want to create a FAQ handout to share, covering all the frequently asked questions the new employee’s full-time co-workers have had when they were being onboarded.The 90-day probation requirement will make a lot more sense, and your new team members will better understand their employment rights, employee benefits, and be able to coordinate health-plan needs for themselves and their dependents around the effective date for when they will get your health insurance group coverage.
Lauren Humphrey
Lauren Humphrey Lauren is a health tech veteran and a licensed producer of accident, health, and life insurance. She previously lead benefits advising and operations at Gusto.
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