When an employee is hired, their new hire enrollment window opens. This new hire enrollment window can stay open for 14 days after the hire date to as long as the date their benefits become effective. Employers will sometimes, but not always, allow a 30 day grace period beyond the effective date to enroll in benefits as a new hire.
The Hire Date Opens the New Hire Enrollment Period
The employee’s hire date is the date the new hire enrollment period begins assuming the employee is working enough hours to qualify as a benefit eligible employee.
Most Common New Hire Enrollment Period Deadlines
The new hire enrollment window will vary from employer to employer but here are some of the most common new hire enrollment periods.
- Within 30 Days After the Hire Date New hires must enroll within 30 days after their hire date. If they do not enroll within those 30 days, the new hire enrollment period ends and the employee automatically declines benefits if they have not enrolled.
- Before the Effective Date of Benefits The new hire must enroll by the effective date. Once benefits would have become effective, the new hire benefits enrollment window closes. If the employee has not enrolled by the effective date, the employee automatically declines benefits.
- During a 30 Day Grace Period The new hire must enroll within 30 days after the effective date. If the new hire does not enroll by the end of the grace period, the employee automatically declines all benefits.
The Effective Date of Benefits for a New Hire is Subject to an Eligibility Waiting Period
Once an employee enrolls, their benefits are subject to an eligibility waiting period. Benefits go into effect at the end of the waiting period not when an employee enrolls in benefits.
Here are some of the most common eligibility waiting periods.
- Date of hire Benefits become effective on the date an employee is hired.
- First of the month following date of hire (FOMF Hire Date) Benefits become effective the first of the month following the date of hire. Example: Employee is hired on May 23rd. The effective date of the employee’s benefits is June 1.
- First of the month following 30 days (FOMF 30 Days) Benefits become effective the first of the month following 30 days after the hire date. Example: An employee is hired on May 23. 30 days from the hire date is June 22. The effective date of benefits is July 1.
- First of the month following 60 days (FOMF 60 Days) Benefits become effective the first of the month following 60 days after the hire date. Example: An employee is hired on May 23. 60 days from the hire date is July 22. The effective date of benefits is August 1.
- 91st day Benefits become effective on the 91st day after the hire date. Example: Employee was hired on May 23. 90 days after the hire date is August 21. The effective date of benefits is August 22.
Benefits must become effective no later than the 91st calendar day according the Affordable Care Act.
Different Classes of Employees at the Same Employer Can Have Different New Hire Eligibility Waiting Periods
While all employees may have the same eligibility waiting period, different classes of employees can have different eligibility waiting periods.
For example, salaried employees eligibility waiting period may be first of the month following date of hire while hourly employees could be first of the month following 60 days.
Newly Eligibile Employees and Re-hires May Have Different Eligibility Waiting Periods
Employees who have a status change from a non benefit eligible status to a benefit eligible status like from part-time to full-time are called newly eligible employees. Newly eligibles employees may have the same or different waiting periods than the new hires do.
Because a newly eligible has already been working for the employer, the waiting period for newly eligible employees may be shorter than that of new hires. This is to recognize the fact that the newly eligible employee has already been working for the employer and may give a reduced waiting period because of that.
The newly eligible enrollment window would begin on the date of the status change.
The same applies to re-hires hired again within a short period of time. As an example, employees may have a reduced waiting period if they are re-hired within 30 days but would again be considered a new hire after that.
Different Benefits Could Have Different Effective Dates When Coverage Begins
The effective date of benefits can also be different for different benefits.
For example, a 401K plan might have a year of service requirement before a new hire can enroll.
Voluntary benefits may also be enrolled off cycle outside of a new hire health insurance enrollment or open enrollment period where employees eligible for those benefits may be still considered a new hire.
The policies and underwriting guidelines of the insurance companies involved will dictate how these situations will be handled.
What Determines the Eligibility Waiting Period and the Effective Date of Benefits
Eligibility waiting periods are established by the employer in conjunction with the insurance companies involved. Employers work with the benefit brokers to establish what these policies are.
Employer groups with high turnover will often have longer eligibility waiting periods for their new hires. Employers who need to attract employees will often offer shorter waiting periods.
Why Would An Employee Have to Wait Up to 90 Days for Benefits to Go into Effect?
It’s expensive to set up employee benefits. Waiting periods of up to 90 day for benefits to go into effect are common in industries that have a high turnover rate. Insurance companies, employers and enrollment companies don’t want to set up benefits for employees who often terminate before the benefits go into effect.
New Hire Enrollments after the Effective Date
Some employers will choose to allow employees to enroll after the effective date.
Employers will sometimes do this if benefits go into effect FOMF the hire date. If an employee is hired on May 23 and benefits go into effect on June 1, employers will sometimes allow their new hires to enroll within 30 days after their hire date even though that deadline falls after the effective date.
As an example, a new hire hired on May 23 with a 30 day deadline to enroll and a FOMF effective date could enroll until June 22nd. The effective date of benefits would be backdated to June 1. This is done so employees hired close to the effective date (like being hired on May 31 and a June 1 effective date) will have enough time to review their benefit options and complete their enrollment.
Other employers may just give their new hires a blanket 30 day grace period after the effective date.
Employers are under no obligation to allow employees to enroll after the effective date. This is just a courtesy some employers extend.
Handling New Hire Enrollments after the Effective Date
New hire enrollments completed after the effective date may need special handling in two ways.
- Entering enrollments directly into the carrier portals Depending on the ben admin system in place, it’s possible that enrollments after the effective date may need to be entered directly into the carrier portals.
- Catching up payroll deductions Deductions for benefits begin the first pay after the effective date. If deductions have already started, then those deductions will need to be caught up by doing catchup deductions from the employee’s paycheck.
Because enrollments after the deadline bring an extra administrative burden to the employer’s HR and payroll team, many employers will not allow enrollments after the effective date.
New Hire Enrollment Deadline
Once the new hire enrollment period ends, if the employee has not enrolled in benefits, they will need to wait until the next open enrollment or for a qualifying life event to open up a special enrollment to enroll in benefits.
Employees that do not enroll during their new hire enrollment period are automatically enrolled in any employer paid benefits.
New Hire Enrollments Right Before or at the Same Time as Open Enrollment
Open enrollment time is a confusing time for new hires. It’s possible for a new hire to be eligible to enroll with a November 1 effective date and then have to turn around and enroll at the same time or again shortly there after during open enrollment.
It’s also possible that a new hire’s effective date may coincide with open enrollment.
Whatever the case, it’s important to pay attention to the employees who need to enroll as new hires while open enrollment is going on because the employees affected may not realize the difference.
I’ve seen employees lose out on important guaranteed issue opportunities available as a new hire get very upset that they missed the new hire enrollment window when they learn about it at open enrollment.
Employee Missed New Hire Enrollment Period, Now What?
Inevitably, an employee will miss their new hire enrollment and want an extension of their new hire enrollment period once they find out they missed out.
It’s important to realize that the employer can’t just arbitrarily set the effective dates of coverage.
Employers need to work with the insurance carriers and their broker partners to grant any exceptions.
Many employers make no exceptions to the new hire enrollment deadline. While it doesn’t hurt to ask for an exception and they are made from time to time, it’s not required that an employer make exceptions for employees who miss their new hire enrollment window.
If an exception can’t be obtained, you’ll need to wait until open enrollment unless you have a qualifying life event that opens a special enrollment period for you.
Importance of Communicating the New Hire Enrollment
It’s important for employers to have an effective communication strategy to their new hires about how the new hire enrollment process works and when the deadline is.
Being clear about how a new hire needs to enroll and when they need to enroll by will prevent a lot of problems.
Conclusion
How long does a new employee have to enroll in benefits?
The amount of time new hires have to enroll in their benefits will vary from employer to employer. These policies are set up in cooperation with the employer, the insurance companies and the insurance brokers.
If you are an employer, any questions about the new hire process or exceptions to it, should be reviewed with your insurance broker.
If you are an employee, you’ll want to pay attention to the communications your employer sends to you and follow those instructions. If you have any questions about the process, you should reach out to your Human Resources contact before the new hire window closes to make sure you don’t miss your time to enroll.
