Insights

FAQ: If a new employee takes leave during their waiting period, are they still eligible to begin coverage on their original effective date?


This will depend on the reason the employee took leave. HIPAA prohibits discrimination based on a health factor. Before HIPAA was implemented, many plans had provisions stating that employees had to be actively-at-work on the day their coverage would otherwise begin. However, one of the implications of HIPAA is that any plan that has an actively-at-work clause must treat an employee who is absent because of a health problem as being at work.

This would mean that medical-related leave taken during an employee’s waiting period would be counted in the days needed for the employee to meet the waiting period. Likewise, plans that don’t allow for coverage to begin unless the employee is at work on the first effective date of the coverage would have to have a carve out for those who are absent due to a medical condition.

Consider the following example:

An employee begins work on October 1 and has a 30-day waiting period. Coverage under the plan would become effective on the first day of the month following that waiting period (November 1). On October 20, the employee takes leave to have surgery and is unable to return to work until November 12.

Because the employee was out for a medical reason, the employee’s leave is disregarded for waiting period and effective date purposes. The employee would be eligible to begin coverage on November 1.

If the leave is a nonmedical leave, the plan terms will dictate whether the employee has met their waiting period requirement and is eligible to begin coverage. If there is an actively-at-work clause, then employees taking nonmedical leave may not be eligible to begin coverage if they take leave during their waiting period or on the first day that coverage should be effective. Employers should ensure that they ultimately follow plan terms.