Health Plan Eligibility: Do’s and Don’ts

Employers sponsoring group health plans have some flexibility when deciding which groups of employees and dependents will be eligible for coverage. However, there are several crucial eligibility requirements employers should adhere to for health coverage. These rules can be categorized into important eligibility “do’s” and “don’ts” for employers to follow.

A basic eligibility “do” is following the terms of the health plan’s written plan document, including its eligibility rules. Also, to avoid potential penalties, applicable large employers (ALEs) should ensure they offer affordable coverage to their full-time employees. Other important “do’s” include making coverage available for adult children up to age 26 and continuing to offer coverage for Medicare-eligible employees when the health plan is the primary payer.

Essential “don’ts” for health plan eligibility include offering coverage to nonemployees, such as independent contractors, andimposing waiting periods that exceed 90 days. Other crucial “don’ts” are overlooking applicable nondiscrimination requirements when establishing eligibility rules and excluding employees from coverage based on health status-related factors.

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