Ask a Broker: When Do I Have to Offer Benefits to My New Hire?

Hi Emma,
Can you please tell me how long I have to wait before offering health insurance benefits to a new hire?

Thanks,
Kristy
- Business HR manager in Santa Rosa

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Hi Kristy,

Thank you for writing. As you are likely aware, employee benefits can often be a deciding factor for many job candidates in accepting a position. How soon those benefits are available to the employee and his or her family can also be a consideration that tips the scales in your favor. So it’s understandable that you have questions about when benefits should start. 

ACA Sets 90-Day Deadline

Regardless of the size of your business, if you offer health insurance benefits to your employees, you are required by the Affordable Care Act (ACA) to offer those benefits within 90 days of the employee’s starting work date. You can begin benefits for new employees on their first day at work, or any date before the 90-day deadline. It’s completely up to the business and their policies. However, the insurance carriers will only start health insurance coverage on the first of the month. For this reason you ultimately have three options for waiting periods to stay compliant with the ACA 90-day rule:
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• 1st of the month after date of hire.
• 1st of the month following 30 days after date of hire.
• 1st of the month following 60 days after date of hire.

Choosing a Waiting Period

There are many factors to consider in setting an eligibility period for employee benefits to begin. Some factors to consider include:
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• Turnover rate: Does your industry have a high turnover rate? If so, a 90-day waiting period may make sense. It can also help you avoid higher administrative costs due to increased paperwork.
• Competition: If you compete with area businesses for work talent, a longer waiting period may cause you to lose some candidates.
• Employee type: Many companies offer employee benefits only to full-time workers. If you choose to offer benefits to part-time employees, consider setting a waiting period of a certain number of hours worked.
• Cost: Business can save money by establishing a longer waiting period before making health insurance available.

Spouses and Dependents

Employee benefits that extend coverage to spouses and dependents is not required, but many companies choose to offer it, knowing it can be another factor in hiring the right employee. If you are considered a “large employer” under the ACA, you must offer dependents certain health services to comply with the shared responsibility mandate. In California, domestic partners who aren’t married may still obtain health insurance equivalent to a spouse under the California Insurance Equality Act of 2004.

To be competitive in some job markets, you may find that a great employee benefits package is crucial to attracting the talent you want. Although you have up to 90 days to begin new employee benefits, it can be a wise hiring incentive to offer them sooner. 

Best of luck,
Emma Fitzpatrick


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