What Is a Waiting Period and Why Is It Important?

One of the first decisions employers make when offering health insurance is choosing a waiting period.

While it may seem like a small administrative detail, your waiting period affects employee eligibility, benefit costs, onboarding, and ACA compliance.

What Is a Waiting Period?

A waiting period is the amount of time a newly eligible employee must wait before becoming eligible to enroll in your health plan.

Common waiting periods include:

• First of the month following date of hire
• 30 days
• 60 days
• 90 days (the ACA maximum for most plans)

For example, if your waiting period is "First of the month following 30 days," an employee hired on March 15 would become eligible on May 1.

Why Does It Matter?

Choosing the right waiting period impacts both employers and employees.

A shorter waiting period means:

• Employees receive benefits sooner.
• Your company becomes more competitive when hiring.
• New employees have immediate access to healthcare.

A longer waiting period can:

• Reduce benefit costs for employees who leave shortly after being hired.
• Help employers manage healthcare expenses.
• Align benefit eligibility with company policies.

ACA Rules

For employers subject to the Affordable Care Act (ACA), waiting periods generally cannot exceed 90 days for otherwise eligible employees.

Which Waiting Period Is Best?

There isn't one answer for every employer.

Companies with high turnover often choose longer waiting periods to manage costs, while employers competing for talent frequently offer benefits immediately or on the first of the month following hire.

The best waiting period balances employee satisfaction, recruiting goals, and benefit costs.