What Is a Waiting Period in Health Insurance?
A waiting period in health insurance is the amount of time you must wait between enrolling in an insurance plan and your coverage beginning. If you receive healthcare during your waiting period, your pending plan will not cover it.
Waiting periods are common for employer-sponsored health insurance plans. Waiting periods may apply to both the primary beneficiary and their insured dependents. More than two-thirds of insured employees face waiting periods for their group health insurance plans. Other types of insurance may also require waiting periods.
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How Waiting Periods Impact Policyholders
Waiting periods for group insurance offer several advantages for the employer, including:
- Providing a probationary period for new employees to ensure a good employee-job fit
- Preventing insurance fraud and abuse, such as accepting a job offer just to obtain coverage for an expensive health concern
- Controlling insurance costs
Typically, the waiting period allows the employer to evaluate an employee’s performance before their full employer-provided benefits, including health insurance coverage and 401k contributions, take effect.
The disadvantages of waiting periods fall primarily on the insured. Drawbacks may include:
- Delays in necessary treatment
- The financial burden of paying out of pocket for care
- Having to pay for other health coverage while waiting for the new coverage to begin
If your new plan has a waiting period, it’s critical to find alternative coverage options to ensure you do not have a lapse in coverage.
How Do Waiting Periods Work?
Waiting periods typically last 30-90 days, but federal law stipulates that waiting periods for job-based plans cannot last longer than 90 days, with a few exceptions. After 90 days, coverage must take effect, and the plan must start covering claims.
During your waiting period, you cannot seek coverage for medical treatment or care and request to be billed later after your coverage kicks in. Your insurer will only cover claims for treatments that take place after your waiting period ends.
Marketplace Waiting Periods
If you purchase a plan through the Affordable Care Act (ACA) Health Insurance Marketplace, you may have a waiting period before your coverage begins. The details of your waiting period depend on when you enroll and pay your premium.
Open enrollment for a Marketplace plan runs from Nov. 1 to Feb. 1 every year. If you enroll before Dec. 15, your coverage will start on Jan. 1. If you enroll after that point, coverage will kick on on Feb. 1.
Certain life events, such as having a child, getting married, and losing health coverage, trigger a special enrollment period (SEP). If you enroll in a Marketplace plan during an SEP, your coverage should begin on the first day of the following month.
Medicaid Waiting Periods
Medicaid is a publicly funded health insurance program jointly managed by the federal government and individual states. Medicaid offers low-cost or free healthcare to low-income adults, adults with disabilities, older adults, <a class="wpil_keyword_link" href="https://www.nashp.org/eligibility-levels-for-coverage-of-pregnant people, and children.
The Children’s Health Insurance Program (CHIP) provides similar benefits to children whose families do not qualify for Medicaid but cannot afford insurance for their kids. CHIP and Medicaid are closely related.
Because Medicaid and CHIP are administered at the state level, waiting periods and other details may vary by state. For instance, the federal government stipulates that many immigrants to the U.S. must wait 5 years after receiving “qualified” immigration status before they can get coverage under Medicaid or CHIP. However, states have the option to remove this waiting period. California, for example, does not enforce a 5-year waiting period for immigrants.
Some states also impose a waiting period between when a child loses coverage from a group health plan and becomes eligible to enroll in CHIP. This waiting period cannot exceed 90 days.
Medicare Waiting Periods
Medicare is a federal health insurance program for people who are 65 or older and people with end-stage renal disease (ESRD), Amyotrophic Lateral Sclerosis (ALS), and certain disabilities.
Formal Medicare waiting periods can vary. For example, suppose you are under 65 and receive Social Security Disability Insurance (SSDI) benefits due to a disability or chronic illness. You must receive SSDI benefits for two years before you qualify to enroll in Original Medicare.
There are some exemptions to this waiting period. Individuals with ALS can get Medicare coverage within a month of becoming eligible for SSDI benefits. People with ESRD may also qualify earlier in some cases.
Group Health Insurance Waiting Periods
Employers are legally obligated to provide group health insurance to their full-time employees if they employ 50 or more people. Employer-sponsored insurance offers medical coverage for employees and their dependents.
Waiting periods are common in group health insurance plans. Each employer determines their plan’s waiting period. Some do not have any waiting period at all, and employees are eligible to receive coverage on their first day of work. Other employers may wait to start coverage until a new employee has stayed on for a while. But all group plans must follow some basic guidelines:
- An employer can require a one-month orientation period before health coverage eligibility begins.
- After a full-time, coverage-eligible employee completes the orientation period, the waiting period for coverage can not extend beyond 90 days.
- Edited: Some companies determine coverage eligibility based on the cumulative hours an employee has worked. for example, an employee may not become eligible for coverage until they have worked at least 1,000 hours. The maximum threshold for eligibility in this case is 1,200 hours worked.
- All calendar days count toward the waiting period.
- Waiting periods may apply to rehired employees as if they are new hires.
You may also need to pay a premium before your waiting period ends and your health benefits begin.
Types of Waiting Periods
If you have a group health plan, watch out for these types of waiting periods:
- Initial: Your initial waiting period depends on your employer’s policies, such as whether you must complete an orientation period before your waiting period can begin.
- Maternity and newborn: While some group plans may set special waiting periods for preexisting conditions, pregnancy is not one of those conditions. Likewise, a plan cannot enforce a waiting period for a newborn.
- Pre-existing condition: A pre-existing condition is a condition you had before enrolling in your health plan. If you are diagnosed with a condition within 6 months after enrolling, that may also count as a pre-existing condition. For your first 12 months of enrollment, your plan may refuse to cover costs for medical treatment related to a pre-existing condition. This waiting period is called a pre-existing condition exclusion.
How To Navigate Waiting Periods
A waiting period can create a lapse in health coverage, which may lead to expensive medical bills. If your health insurance plan imposes a waiting period, here’s how to handle it:
- Understand your policy. Speak with your employer and review your insurance policy carefully to understand any waiting periods and when they expire.
- Stay healthy. Avoid high-risk activities, and do your best to ensure your safety and well-being if you’re facing a coverage gap.
- Consider short-term health insurance. Short-term health insurance may be available in your state, but coverage under these plans is often limited.
- Consider other alternatives. If you are enrolling in a health plan during an SEP, you can avoid a lapse in coverage by continuing your previous coverage under COBRA, joining a spouse’s workplace plan, or joining an ACA plan until your waiting period ends.
Can You Reduce Waiting Periods?
Generally, you cannot reduce a health insurance waiting period unless your situation falls under an exemption. For example, you may be able to cut a waiting period short in the following scenarios:
- You develop ALS while waiting for Medicare coverage
- You qualify for an exception to a state-based Medicaid coverage waiting period
- Your employer-sponsored HMO plan has an affiliation period, which limits your waiting period to two months
Additionally, Medicare coverage can begin as early as the first month of a regular course of dialysis treatments in certain situations.
Understanding COBRA
Continuation coverage under COBRA allows you to continue your prior employer’s health insurance plan for yourself and your family even after you’ve left your job. Continuation coverage can help you avoid a lapse in coverage during a waiting period for your next health insurance plan.
However, your previous employer will no longer subsidize the cost of your plan’s premium. This means you may have to pay up to 102% of the plan’s full cost under COBRA.
Putting It All Together
If you’re starting a new health plan, you may have to wait up to several months before the plan’s coverage kicks in. Your employer can impose a waiting period of up to 90 days, plus a 30-day orientation period after your hire date. During this time, it’s important to seek secondary health coverage through a short-term insurance plan, a spouse’s plan, or COBRA to ensure your coverage does not lapse.
Government-sponsored health plans like Medicare, Medicaid, and CHIP may also have waiting periods in specific circumstances.