Rehired employees and breaks in service: when coverage restarts and when a waiting period applies again.
The ACA break-in-service rules, how plan documents and carriers treat a returning employee, what leave does not count as a break, and the paperwork that keeps a rehire from being missed. Written for the owner or HR lead.
Is a Returning Employee a New Hire or a Continuing One?
The answer decides whether the person serves a new waiting period or picks up where they left off.
The Question Comes Up Constantly
Seasonal workers return, employees resign and come back, and leaves of absence end. Each raises the same question about eligibility. Without a written approach, managers tend to answer these case by case, and similar employees end up with different results. Decide in advance how each situation is handled, then apply it the same way every time. Try our free premium proration calculator to run the numbers for your own group.
Two Sets of Rules
The ACA sets outer limits on what an employer may treat as a new hire. The plan document and carrier decide what your plan actually does. An employer cannot simply rely on its own preference if it conflicts with the ACA limits, and the carrier may be stricter than your plan document. Compare all three before you tell an employee what happens on return.
Write Down the Rule
A short rehire policy in the plan document and handbook prevents inconsistent treatment of similar employees. Define the length of break that triggers a fresh waiting period and say which kinds of leave do not count as a break. Have your attorney or benefits adviser review the wording so the plan document, handbook and carrier setup match.
How the ACA Treats a Gap in Employment
For ACA employer mandate purposes there are two main tests, depending on how the employer measures hours.
The Rule of Parity
Under the look-back measurement method, an employee can generally be treated as new after a break of at least 13 weeks, or 26 weeks for educational organizations. A shorter break counts if it exceeds the prior period of employment and lasts at least 4 weeks.
The Monthly Method
Employers using the monthly measurement method generally may treat a rehire as a new hire after a break of at least 13 consecutive weeks, with a similar rule for educational organizations. The rule applies only to employers using that measurement method, and it does not by itself decide what your plan does for waiting periods. Confirm your method with your benefits adviser before relying on a break length.
Leaves Are Not Breaks
Unpaid leave under FMLA, USERRA or jury duty is generally treated as a period of employment, not a break, for these tests. Treating a protected leave as a break can lead to the wrong eligibility result and possible compliance trouble. When a worker returns from leave, check the type of leave and the applicable rules, and ask counsel if it is unclear.
Choosing What Your Plan Does
Most plans are more generous than the ACA minimum for short gaps.
Reinstatement Within a Set Window
Many plans restore coverage on the first of the month after rehire when the break is short, often 30 to 90 days, with no new waiting period. The window is a plan design choice, not a legal requirement, so check what your plan document and carrier actually allow. Write the window down so HR can answer returning employees the same way each time.
A New Waiting Period After a Longer Break
A rehire after a longer gap serves the waiting period again, so long as it stays within the 90-day limit. Count the days from the date of hire the plan uses, and confirm the carrier’s waiting period setup follows the same start date. Tell the returning employee the new effective date in writing so they can plan around the gap.
Seasonal and Rehire Rules Together
Seasonal employers often pair a reinstatement window with a look-back measurement method. The two should be designed together. A seasonal employer may need to decide how a returning worker is measured, when coverage is offered and whether a reinstatement window applies. Map out a typical season on paper, then test the plan wording against it.
Make Sure the Carrier Matches Your Plan
The employer’s rule only works if the carrier will administer it.
Carrier Waiting Period Rules
Carriers load a waiting period and a rehire rule into the group’s setup. Differences between the plan document and the carrier can create denied claims. Ask the carrier to confirm in writing how its system treats a rehire, and compare that to the plan document. A mismatch is usually found only after a claim is denied, so a short review before the plan year can prevent it.
Reinstating Rather Than Re-Enrolling
Some carriers reinstate a terminated member, others require a new enrollment with the same waiting period. Ask before you rehire. If the carrier treats the rehire as new, the employee may need to complete enrollment forms again and wait for the standard period. Ask the question for each carrier on your plans before you promise an employee a return date for coverage.
Notify Within the Carrier’s Window
A late add can leave a gap or require evidence of insurability on some products. Submit the change promptly. Carrier add windows are often short, and missing one may mean new enrollment forms or health questions for products that use them. Set an internal deadline well ahead of the carrier’s date and track each rehire until it is confirmed.
When the Employee Was on COBRA
A rehire during COBRA continuation raises its own questions.
COBRA Can End on Rehire
Continuation coverage generally ends when the person becomes covered under the plan again as an employee, as the plan terms provide. Whether COBRA ends on a rehire depends on the plan terms and the facts. Tell the former COBRA participant in writing when coverage as an employee begins and when COBRA ends, and ask your COBRA administrator or counsel if the dates are unclear.
Overlap Needs a Clean Handoff
Confirm the end date on one coverage and start date on the other so claims are not paid or denied twice. Where an employee moves from COBRA to active coverage, a gap or an overlap can cause claims to be rejected or pended. Send the same dates to the carrier, your COBRA administrator and payroll so everyone records the change the same way.
Refund Any Overpaid Premium
Premiums paid for a month the employee was already active should be sorted out between COBRA and payroll. If premiums were collected twice, work out who received them, whether COBRA or payroll, and refund the employee promptly. Keep a note of the correction so the employee can see it was handled and so your files are complete.
Keep the Records That Prevent a Missed Rehire
The most common rehire problem is that nobody tells benefits.
Flag Rehires in Payroll and HR
Add a rehire step to the onboarding checklist so benefits is told the same day. Do not rely on managers remembering to tell benefits staff. Add the rehire to the same checklist and system that handles new hires, with a prompt to review the break length, prior leave and any waiting period that may apply.
Record the Original Hire Date and Break Dates
The dates drive both the waiting period and ACA measurement. Keep them in one place. If the dates are scattered across payroll, paper files and emails, the waiting period and measurement results can be wrong. Pick one record that the HR team treats as the source of truth, and update it whenever someone leaves or returns.
Handle Seasonal Returns as a Group
Seasonal employers can set a yearly date to review every returning worker at once. A set review date helps you apply the same rules to every returning worker and avoid one-off decisions. Before the season, list who is expected back, check each person’s prior dates and tell them when coverage would start if offered.
The questions that come from returning employees.
Six questions employers bring us about rehires and breaks in service.
How long a break before a rehire is a new hire?
For ACA purposes generally 13 weeks or more, and 26 weeks for educational organizations. Your plan may be more generous.
What is the rule of parity?
A break of at least 4 weeks that is longer than the prior period of employment can also allow new-hire treatment under the look-back method.
Does FMLA leave count as a break?
Generally no. Leave under FMLA is treated as continued employment for these tests.
Can our plan reinstate coverage without a waiting period?
Yes, many plans do for short gaps. The plan document and carrier must both reflect it.
What if an employee was on COBRA when rehired?
Continuation coverage generally ends when the person is covered as an active employee. Coordinate the dates carefully.
Who tells the carrier about a rehire?
The employer or its benefits administrator. Make it part of the same-day rehire checklist.
Ready? Send us your renewal, or talk it through with someone first. No cost, no obligation.
General information about rehire and break-in-service rules, not legal advice. Your plan document and carrier rules control, and we will help you read them.
Related guides.
Fixing Enrollment Errors
Missed enrollments, wrong deductions and retroactive terminations, and how to correct them.
Waiting Periods for Group Health Coverage
The 90-day limit and common designs.
Variable-Hour and Seasonal Employees
How the ACA look-back method works.
FMLA and Leave for Employers
How leave affects eligibility and coverage.
Send us your renewal.
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The renewal letter
Your current plan summary
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Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
Laws and rules referenced
26 C.F.R. § 54.4980H-3 — Determining full-time employees: monthly and look-back measurement methods.
26 C.F.R. § 54.4980H-1 — Definitions, including full-time employee, seasonal worker and how employees are counted.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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