Employee Health Insurance Eligibility in California: Waiting Periods, New Hires and Qualifying Events

Employee health insurance eligibility in California depends on the employer's group health plan, an employee's employment status and applicable state and federal rules. Employers also need procedures for enrolling new hires, adding eligible dependents and processing enrollment changes after qualifying life events.

Quick answer: Eligible employees generally have an opportunity to enroll in employer-sponsored health insurance when they first become eligible, during the employer's annual open enrollment period or after certain qualifying life events. Employers may impose an applicable waiting period before coverage begins, but federal rules generally prohibit an otherwise eligible employee from being required to wait more than 90 days for coverage to become effective.

For a broader overview of group coverage, plan options, costs, eligibility and employer considerations, see our complete guide to small business health insurance in California.

Who Is Eligible for Employer Health Insurance in California?

Eligibility for employer-sponsored health insurance depends on the rules of the employer's group health plan and the applicable insurance arrangement.

Factors that can affect eligibility include:

• Employment status
• Hours worked
• Employee classification
• Completion of an applicable waiting period
• The employer's eligibility rules
• Carrier or program requirements

Employers should establish clear eligibility rules and apply them consistently to similarly situated employees.

For a broader overview of group coverage, see our California Employer Health Insurance Guide.

When Does a New Employee Become Eligible for Health Insurance?

A new employee generally becomes eligible according to the eligibility terms established by the employer's health plan.

For example, a plan might provide coverage to an eligible employee after completion of an applicable waiting period.

The employee must also complete the required enrollment process within the time allowed by the employer and health plan.

Employers should communicate the employee's eligibility date and enrollment deadline during the onboarding process so the employee has an opportunity to make a timely coverage election.

What Is a Health Insurance Waiting Period?

A waiting period is the period of time that must pass before an otherwise eligible employee's group health coverage can become effective.

An employer may establish an applicable waiting period as part of its eligibility rules, subject to federal and California requirements.

The waiting period should not be confused with the time it takes an insurance carrier to process enrollment paperwork.

What Is the Maximum Health Insurance Waiting Period?

Under federal law, a group health plan generally cannot apply a waiting period that exceeds 90 days once an employee is otherwise eligible for coverage.

All calendar days generally count toward the 90-day period, including weekends and holidays.

If an employee enrolls when first eligible, coverage generally must become effective no later than the 91st day after the employee satisfies the plan's substantive eligibility conditions.

Can an Employer Use a 90-Day Waiting Period?

An employer may generally establish a waiting period of up to 90 days, subject to applicable plan and legal requirements.

However, employers should be careful when describing a waiting period as "three months."

Three calendar months can sometimes be longer than 90 days. A plan subject to the federal 90-day waiting-period limitation should be administered based on the applicable 90-day rule rather than assuming that three months will always produce the same result.

Can Coverage Start on the First of the Month?

Many employer health plans use first-of-the-month effective dates, but the plan's eligibility structure must still comply with applicable waiting-period requirements.

For example, an employer may establish an eligibility arrangement designed for coverage to begin on the first of a month following satisfaction of the plan's waiting-period requirements.

The exact effective date depends on the plan design and applicable carrier rules.

Can an Employer Offer Health Insurance Immediately?

Yes. Employers do not have to impose the maximum waiting period.

A business may establish coverage that begins sooner, such as on an employee's date of hire or another permitted effective date, subject to the health plan and carrier's rules.

The 90-day rule is generally a maximum waiting-period limitation, not a requirement that employers make employees wait 90 days.

Do All Employees Have to Receive Health Insurance?

Not every worker necessarily has to be eligible for the employer's health plan.

Eligibility can depend on legitimate employment classifications and the terms of the group health plan.

For example, eligibility rules may distinguish between employees based on factors such as hours worked or employment classification when permitted by applicable law and plan rules.

Employers should avoid applying eligibility rules inconsistently to similarly situated employees.

Are Part-Time Employees Eligible for Health Insurance?

Part-time employee eligibility depends on the employer's health plan and applicable requirements.

Some employers offer health insurance only to employees meeting the plan's full-time eligibility requirements, while others may choose to extend coverage to additional employee classes when permitted.

Employers subject to the Affordable Care Act's employer shared responsibility provisions should separately understand the federal definition of a full-time employee used for those requirements.

For ACA employer-mandate purposes, an employee is generally considered full time if the employee averages at least 30 hours of service per week or 130 hours of service during a calendar month.

See Are California Employers Required to Offer Health Insurance? for more information.

What Happens When an Employee Becomes Eligible?

When an employee becomes eligible for employer-sponsored health insurance, the employer generally provides an enrollment opportunity.

The employee can typically:

• Enroll in available health coverage
• Select among available plans when the employer offers multiple options
• Enroll eligible dependents
• Decline or waive coverage

Enrollment elections should be completed within the applicable enrollment period.

Can an Employee Decline Employer Health Insurance?

Generally, yes.

An eligible employee may choose not to enroll in employer-sponsored coverage.

An employee may already have health insurance through another source, such as:

• A spouse's employer
• A parent's plan when eligible
• Medicare
• Medi-Cal
• Another qualifying health plan

The employer should maintain appropriate records of the employee's coverage election or waiver according to the plan's administrative requirements.

Can an Employee Enroll Later After Declining Coverage?

An employee who declines coverage generally cannot simply enroll at any time they choose.

The employee may need to wait until the employer's next open enrollment period unless they experience an event that provides a special enrollment opportunity.

This is one reason employees should understand the consequences of waiving coverage when first eligible.

What Is Employer Health Insurance Open Enrollment?

Open enrollment is a period established by the employer and health plan when eligible employees can make coverage elections for the upcoming plan year.

During open enrollment, employees may be able to:

• Enroll in coverage
• Change health plans
• Add eligible dependents
• Remove dependents when appropriate
• Waive coverage

The employer's open enrollment dates and available changes depend on the group health plan.

What Is a Qualifying Life Event?

Certain life events can create an opportunity to make health insurance enrollment changes outside the normal annual open enrollment period.

Depending on the circumstances and applicable rules, events can include:

• Marriage
• Birth of a child
• Adoption or placement for adoption
• Loss of other qualifying health coverage
• Divorce or legal separation that results in loss of coverage
• Certain changes involving Medicaid or Children's Health Insurance Program eligibility or premium assistance

The exact enrollment rights and deadlines depend on the event and the applicable health plan rules.

What Happens When an Employee Gets Married?

Marriage can create a special enrollment opportunity under a group health plan.

An eligible employee who previously declined coverage may be able to enroll, and the employee may be able to add a new spouse and other eligible dependents as permitted under applicable rules.

The employee must generally request enrollment within the applicable special enrollment deadline.

What Happens When an Employee Has a Baby?

The birth of a child can create special enrollment rights.

An eligible employee may be able to enroll in the employer's health plan and add the newborn child, subject to applicable enrollment procedures and deadlines.

Special effective-date rules can apply to coverage following birth, adoption or placement for adoption.

Employees should notify the employer or benefits administrator promptly rather than waiting until the next open enrollment period.

What Happens When an Employee Loses Other Health Coverage?

Loss of certain other health coverage can create a special enrollment opportunity in an employer-sponsored group health plan.

For example, an employee who previously declined their employer's coverage because they were enrolled through a spouse's employer may have an opportunity to enroll if that other coverage is later lost under circumstances that qualify for special enrollment.

Employees should contact the employer or benefits administrator promptly because special enrollment deadlines apply.

How Long Does an Employee Have After a Qualifying Event?

The deadline depends on the type of event.

Under federal group health plan special enrollment rules, employees generally must be given at least 30 days to request enrollment following certain events such as loss of other coverage or marriage.

Different rules can apply to other events. For example, special enrollment rights involving Medicaid or the Children's Health Insurance Program generally provide a longer request period under federal law.

Employers and employees should use the deadline applicable to the specific event rather than assuming every qualifying event has the same enrollment window.

Can Employees Add Dependents to Employer Health Insurance?

Group health plans commonly allow eligible employees to enroll qualifying dependents.

Depending on the plan and applicable law, eligible dependents may include:

• A spouse
• Children
• Other individuals who satisfy applicable dependent eligibility requirements

The employee may be responsible for some or all of the additional premium associated with dependent coverage depending on the employer's contribution policy.

How Long Can Children Stay on a Parent's Employer Health Plan?

Under the Affordable Care Act, health plans that offer dependent child coverage generally must make that coverage available until the child reaches age 26.

This generally applies regardless of whether the adult child is married, living with the parent, attending school or financially dependent on the parent.

Coverage of the adult child's spouse or children is not automatically required simply because the adult child remains eligible under the parent's plan.

What Happens When an Employee Turns 65?

An employee who continues working at age 65 may become eligible for Medicare while remaining eligible for employer-sponsored health insurance.

Whether the employee should enroll in Medicare immediately can depend on factors including employer size and whether the group coverage is based on current employment.

Medicare coordination rules can determine whether the employer plan or Medicare pays first.

Employees approaching age 65 should review these rules before deciding to delay Medicare enrollment.

See Working Past 65: Do You Need to Sign Up for Medicare? for more information.

What Happens When an Employee Leaves the Company?

When employment ends, active employee health coverage generally ends according to the terms of the employer's plan.

Depending on the circumstances, the employee may have options that include:

• Federal COBRA continuation coverage
• Cal-COBRA continuation coverage
• Coverage through a new employer
• Individual health insurance
• Covered California
• Medi-Cal, if eligible
• Medicare, if eligible

Different enrollment deadlines apply to these options.

Does Losing Employer Coverage Allow Someone to Enroll Through Covered California?

Loss of qualifying employer-sponsored health coverage can create a Special Enrollment Period for individual health insurance through Covered California.

This can be important for employees who leave a job, lose eligibility for an employer plan or experience another qualifying loss of coverage.

Eligibility for financial assistance through Covered California depends on household income and other applicable eligibility factors.

See our guide to Covered California Special Enrollment and Qualifying Life Events for more information.

What Should Employers Do When Hiring a New Employee?

Employers should have a consistent process for determining and communicating health insurance eligibility.

A new-hire benefits process can include:

• Determine whether the employee belongs to an eligible employee class
• Identify the employee's eligibility date
• Apply the applicable waiting period
• Provide information about available health plans
• Explain the employer and employee premium contributions
• Provide the enrollment deadline
• Collect the employee's enrollment election or waiver
• Submit enrollment information within carrier deadlines

Maintaining consistent eligibility and enrollment procedures can help reduce administrative errors and coverage delays.

What Information Should Employees Receive?

When an employee becomes eligible for coverage, useful information can include:

• The date coverage can begin
• Available health plan choices
• Employee premium contributions
• Dependent premium costs
• Provider-network information
• Enrollment instructions
• The deadline to enroll or waive coverage
• Information about making future enrollment changes

Employees should have enough information to understand both the coverage being offered and the consequences of declining it.

How Much Does Employee Health Insurance Cost?

The employee's cost depends on the total premium, the plan selected and the amount the employer contributes.

Employers commonly pay a portion of employee premiums while employees pay the remaining amount through payroll deductions.

Dependent coverage can create an additional employee premium depending on the employer's contribution policy.

See How Much Does Small Business Health Insurance Cost in California? for more information about group premiums and employer contributions.

Employee Health Insurance Eligibility Checklist for Employers

California employers administering group health coverage can consider the following:

• Define eligible employee classes
• Confirm applicable hours and employment requirements
• Establish a compliant waiting period
• Track employee eligibility dates
• Provide timely enrollment materials
• Document employee elections and waivers
• Maintain procedures for adding eligible dependents
• Process qualifying life events promptly
• Communicate annual open enrollment
• Apply eligibility rules consistently
• Maintain records required by the plan and applicable law

Frequently Asked Questions

How long can an employer make a new employee wait for health insurance?

Federal law generally prohibits a group health plan from imposing a waiting period longer than 90 days after an employee is otherwise eligible for coverage. Employers may establish shorter waiting periods.

Does a new employee have to wait 90 days for health insurance?

No. Ninety days is generally the maximum permitted waiting period, not a required waiting period. An employer may provide coverage sooner subject to its plan and carrier rules.

Is three months the same as a 90-day waiting period?

Not always. Three calendar months can exceed 90 days, so employers subject to the federal waiting-period limitation should administer eligibility according to the applicable 90-day requirement.

Can an employee decline employer health insurance?

Generally, yes. An eligible employee can usually waive employer coverage. The employee may need to wait until open enrollment or experience an applicable special enrollment event before enrolling later.

Can an employee enroll after getting married?

Marriage can create a special enrollment opportunity. Applicable enrollment deadlines and plan procedures must be followed.

Can an employee add a newborn outside open enrollment?

Yes. Birth of a child can create special enrollment rights, subject to applicable enrollment procedures and deadlines.

Can an employee enroll after losing a spouse's health insurance?

Loss of certain other health coverage can create a special enrollment opportunity in an employer's group health plan. The employee should notify the employer promptly because enrollment deadlines apply.

Can children stay on employer health insurance until age 26?

Health plans that provide dependent child coverage generally must make that coverage available until age 26 under the Affordable Care Act.

Does losing a job create a Covered California enrollment opportunity?

Loss of qualifying employer-sponsored health coverage can create a Special Enrollment Period for individual coverage through Covered California, subject to applicable eligibility requirements and enrollment deadlines.

This article is for general educational and informational purposes and is not legal, tax or accounting advice. Employee eligibility, waiting periods, special enrollment rights, effective dates and dependent eligibility can vary based on the employer's plan, insurance arrangement and individual circumstances and may change over time. Employers should review current plan documents, carrier requirements and applicable state and federal guidance for requirements that apply to their group.