b' Wordw w w. w m i m u t u a l . c o mWAIVING INSURANCEWaiting Periods can haveUnintended Consequences By David Leo, President of Mis the waiting period. This isIf a company is dissatisfied with its waitingWMI Mutual Insurance An important part of any group healthCompany & WMI TPA insurance plan period, it is free to change it. While this is the period of time that must pass before cover- the preferred way to deal with waiting period age can begin for an employee or dependent whoremorse, many employers dont want to modify is otherwise eligible to enroll in the plan. In thetheir waiting period for all plan participants, past, employers were generally free to imposechoosing instead to waive the waiting period any waiting period requirement they wanted, asrequirements on a case-by-case basis. Because long as it was applied consistently and didntan employers decision to waive a waiting period violate other applicable laws (e.g., the prohibi- undermines the integrity of the employers plan tion against discrimination). (and may constitute a violation of the employers fiduciary obligation under federal law), I strongly Since 2014, when many provisions of the recommend against it. At a minimum, employers Affordable Care Act became effective, employershould consult with competent legal counsel (an waiting periods have been limited to a maximumoxymoronic term, I know) before going down of 90 calendar days (even if the 90-day periodthe dangerous road of waiting period waivers. is satisfied in the middle of a month).In orderNonetheless, if after such consultation, the em-to ensure that waiting periods are applied fairlyployer still desires to waive the waiting period, and consistently, the federal law known as thehere are just a few extremely important issues Employee Retirement Income Security Actthat must be considered:(ERISA) requires that plan administrators 1.Waiving a waiting period for some em-(i.e., employers) must administer their health in- ployees and not others can expose the em-surance program in accordance with the specificployer to civil liability (and in some cases, plan terms. This includes uniformly applyingcriminal liability and penalties). Addition-waiting period requirements. These laws applyally, such action can expose the involved to fully-insured and self-funded benefit programsindividuals to personal liability for losses alike, and inasmuch as they are federal laws,caused to the plan.they preempt contradictory state laws.2. Arbitrary administration of benefitNotwithstanding the general laws against the willy-nilly administration of health insurancewaiting periods can invalidate the waiting benefits, many employers still arbitrarily admin- period altogether.ister their waiting periods by waiving them for3. Arbitrary administration of waitingsome employees and imposing them on others.periods can result in employers extend-Although this may seem like a nice gesture foring benefits to ineligible employees andIf you have questions the new employee who benefits from the waiver,their dependents. In the event of a claim forabout this article or its rife with risk because it violates the ex- benefits when the employer has extendedwould like to discuss plicit terms of ERISA and circumvents ERISAseligibility to an ineligible participant, theyour companys health objectivity requirement. It also may subject theinsurance company may refuse to recognizeinsurance progam, feel employer to serious liability, including the pos- such an informal plan modification andfree to contact me . I sibility that the employer could have to pay thedeny claims. This could leave the employerwould also invite you to claims of other employees who might demandfinancially responsible to pay those claims,visit our website atequal preferential treatment.In other words,which could be in the hundreds of thousandswww.wmimutual.comwaiving the waiting period for some employeesof dollars. for other interesting articlesbut not others may invalidate the waiting periodand helpful informaiton about 4. Inconsistent benefits administration hurts altogether; but without insurance coverage ingroup health insurance .place, the employer could be forced to pay thoseemployee morale and may even support claims out of company funds. claims of employee discrimination. SWPMA News / Summer 202139'