The eligibility waiting period is the number of days an employee has to wait between when a new hire, newly eligible or rehire employee are eligible to enroll and when coverage goes into effect.
How long the waiting period is varies from company to company and also sometimes with in the same company you may even have different waiting periods for different classes of employees.
The waiting period applies to employees that are eligible for their initial enrollment period due to becoming:
- A new hire
- Newly eligible
- Rehire
Let’s go through some typical waiting periods.
Date of hire – No eligibility waiting period
If your benefits become effective on your date of hire, then you would have no waiting period. This can also be called a zero day wait.
If you get hired on May 21st, then your benefits would go into effect on your hire date of May 21st.
Normally, you can enroll in your benefits during the new hire enrollment window. Let’s say that your enrollment window is 30 days. Technically, you could wait until near the end of your enrollment period to enroll.
However, your coverage would be backdated to your date of hire. One thing to remember is that if the coverage is backdated, you will have to make up that premium to pay for the coverage back to the effective date.
First of the month following date of hire (FOMF)
The next type of waiting period is first of the month following date of hire.
If you get hired on May 21st, your benefit elections will become effective on June 1.
First of the month following 30 days (FOMF 30)
If your waiting period is FOMF 30 and your date of hire is May 21, then you would count 30 days out which is June 20. Benefits would become effective the first of the next month or July 1.
First of the month following 60 days (FOMF 60)
If your waiting period is FOMF 60 and your date of hire is May 21, then you would count 60 days out which is July 20. Benefits would become effective the first of the next month which would be August 1.
30 days
Another option is for your benefits to become effective after 30 days.
If you are hired on May 21, your coverage would go into effect on June 20.
90 days
Finally, the longest a waiting period can legally be is 90 days. If you are hired on May 21, then your benefits would go into effect August 19.
What is the purpose of the eligibility waiting period?
Their are two main purposes of the waiting period. They are:
- Deal with high turnover – The higher the turnover, usually the longer the waiting period. If a company has a high turnover, you wouldn’t want to make employees eligible on the date of hire. That’s because, employees would just get hired on, enroll in let’s say the medical insurance and get what they need done, done. Then they would terminate employment. A longer waiting period, prevents this from happening.
- Provide an incentive to join the company Many companies are in need of workers. A shorter waiting period can also serve another purpose. That’s to provide an employees a reason to start today.
Waiting periods can also change from plan year to plan year.
I’ve seen companies change their waiting periods before.
Conclusion
An eligibility waiting period is a tool that can be used to as an incentive for employees to start to work for you immediately. It can also be used to make sure you are serious about working for the company before insurance goes into effect.
