Bringing new employees onboard is an exciting yet intricate process for any organization. One crucial aspect that often shapes the early stages of an employee’s journey is the new waiting period for benefits.
New Hire Waiting periods, though often overlooked, play a pivotal role in acclimating new hires to their roles, the company culture, and their colleagues. But one of the most important things in that waiting period is the option for benefits. (It is also one of the most common questions asked!)
What is a waiting period?
A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll in the plan becomes effective.
What kind of waiting periods are offered?
Like most things benefits and especially health insurance related, when the Affordable Care Act passed, waiting period rules also changed. Waiting periods were no longer allowed for small businesses of longer than 90 days, so the below are the options available now from most ins. and benefit vendors in the small / medium business space:
- First of the month following date of hire.
- First of the month after 30 days from the date of hire.
- First of the month after 60 days from the date of hire.
- A true 90-day waiting period, meaning the benefits would start on day 91.
This option you don’t see too widely available as most benefit providers have their billing systems setup to run from the first to the end of the month. If / when benefits start on day 91, most of the time that would be sometime in the middle of the month so billing would have to be pro-rated and that gets wonky. Both on the billing side but would also be goofy from a payroll deduction standpoint, so most companies don’t go this route simply because it’s not available from all the different benefit proividers.
Below is a calendar with some examples of what each waiting period and benefits start date would look like using the same hire date of 5/14/2023.
Waiting periods are also a great time for the employer and employee to make sure it is the right fit for the individual and the company! We most commonly see waiting periods of 1st of the month after 30 or 60 days but industry and company culture will dictate.
We do see a good number of industries, typically high paying white collar industries have first of the month after date of hire. This would normally be engineering offices, medical groups, law firms, etc.
Waiting periods for new hires are a valuable opportunity that should not be underestimated. A well-structured waiting period can set the tone for an employee’s entire journey within your organization. By investing time and effort during this phase, companies can foster engagement, productivity, and loyalty, ultimately leading to more successful and satisfied employees in the long run.
Thanks for the read, if you have any questions on new hire waiting periods, please let us know. We’d love to chat!!