A waiting period is the designated time interval an insured individual must endure before some or all of their insurance coverage activates. During this period, no benefits are provided for any claims filed. Waiting periods may also be identified as elimination periods or qualifying periods.
Key Takeaways
- A waiting period, or qualifying period, defines the time before insurance coverage comes into effect.
- Policies ranging from homeowners and auto insurance to short-term disability can incorporate waiting periods.
- High turnover businesses often use waiting periods as a strategic instrument.
- Certain private health insurance plans specify long waiting periods, particularly for conditions like cancer care or maternity services.
How a Waiting Period Works
The interval known as the waiting period or elimination period varies significantly based on the insurer, the policy, and the type of insurance involved. For policies with an extended waiting period before coverage is initiated, a slight reduction in the premium cost is often observed.
In health insurance, multiple waiting period types exist:
- Employer Waiting Period: Often, employees are required to wait for a specified duration, such as three months, before they gain access to company-subsidized health services. This provision is common in companies with high employee turnover rates. Once enrolled, another waiting period may precede the ability to claim coverage.
- Affiliation Waiting Periods in HMOs: Health Maintenance Organizations (HMO) maintain these periods. Federally, the Health Insurance Portability and Accountability Act (HIPAA) ensures these wait periods do not extend beyond two months (three months for late enrollees).
- Pre-existing Condition Exclusion Period: Spanning anywhere from one to 18 months, this period targets specific health conditions known to exist within six months prior to enrolling in a plan. While coverage for pre-existing conditions may be limited or excluded, evidence of continuous prior insurance coverage before policy transition can mitigate this exclusion.
Certain private health insurance plans mandate substantial wait periods for specific coverage types:
- Cancer and Cardiovascular Care: Up to two years.
- Maternity Care: Ranges from 30 to 90 days generally, though it can extend to 10-12 months.
- Dental Care: Wait period of 6 to 12 months, with some policies imposing extra restrictions on frequent dental treatments like denture replacements (often limited to once every five years).
Policyholders should consider their financial capacity to handle expenses when determining the desirable waiting period length in their insurance plans.
Types of Waiting Periods in Different Insurance Policies
Homeowners Insurance: Typically, a wait period ranges from 30 to 90 days before the coverage activates, permitting policyholders to initiate claims. This period, as applicable in coastal areas, may experience delays when a named storm is imminent, thus affecting new policy activation.
State-Imposed Waiting Periods: Some states, such as Texas, enforce a 60-day wait on new auto insurance policies, allowing the insurer to evaluate the driver’s eligibility and risk profile. During these 60 days, the insurer can revoke the policy if any concerning risk factors or undisclosed information is discovered.
Short-term and Long-term Disability Insurance: Short-term disability policies may feature brief wait periods of a few weeks yet come at a higher premium cost; the standard span ranges from 30 to 90 days. Long-term disability policies typically stipulate 90-day to one-year wait periods. No benefits are payable during this probationary duration. Similarly, Social Security disability payments entail a five-month waiting period before benefits are disbursed.
Related Terms: elimination period, health insurance, homeowner insurance, disability insurance, qualifying period, pre-existing conditions.
References
- U.S. Congress. “Health Insurance Portability and Accountability Act of 1996”.
- U.S. Department of Labor. “Health Benefits Advisor for Employers”.
- Texas Department of Insurance. “Consumer Bill of Rights”.
- Mutual of Omaha. “The Waiting Period for a Disability Insurance Policy”.
- Social Security. “Is There a Waiting Period for Social Security Disability Insurance (SSDI) Benefits?”
