Recommend health benefits waiting period?

Waive the waiting period. If you expect your hire to stay for at least five years, the cost becomes less significant. It is very hard to find ways to increase employee satisfaction without throwing money at the employee. To your prospect employee, this benefit can tip the scales to you vs going to your competitor.

We had the same thing at my company. I eliminated the waiting period so new employees could avoid this hassle.
Yes, it does add an extra month in costs, but is that really material in the context of the employee's total tenure with you? Unless the company is catastrophically bad at recruitment, the number of times you 'waste' that cost on a bad hire will be negligible.

I've worked for companies in which medical insurance started on day 1, however, there was a waiting period (3 months) applicable to pre-existing conditions. The waiting period for pre-existing conditions was waived if the candidate could provide proof of prior insurance coverage with no gaps for the last 12 months. This seemed like a good way to give employees an important benefit yet avoid getting candidates looking only for a quick medical fix verses doing the job.

I say waive the wait period. The cost is small compared to the gain. MOst new employees expect a waiting period so if the is none you are up one on your competitor.

I have to agree - benefits on the first day. As you grow, if turnover increases, you may need to revise the policy.