Voluntary drop of Medical Coverage - Religible later?
HR Mouse
53 Posts
Our company offers Medical Insurance to only our Full-Time/Year-Round Employees only. A couple of our Full-Time/Seasonal Employees were allowed on the current plan when we switched from one insurance carrier to our current carrier - they were Grandfathered in and allowed to have the coverage. Now one of these employees wants to voluntarily drop his Medical Coverage (for him & his entire family as he has family coverage). I explained & stressed to him that once he drops his insurance he won't be eligible to re-enroll until our next Open Enrollment Period of April 01, 2009! Our General Manager seems to think that he will not be eligible to re-enroll at all considering he does not meet the criteria to have coverage - his status is not Year Round. So now I'm wondering if that is true - I was thinking that because he was on our plan previously that he would be able to re-enroll at the Open Enrollment Period (or due to loss of coverage elsewhere before the Open Enrollment Period). Any thoughts on this? Would his ability to re-enroll be Grandfathered in as well???
I am trying to avoid calling our Insurance Broker for this one just because they are out of state & I typically don't get a response back from them for days - sometimes weeks. I thought I'd check in with the wonderful members of HR.BLR.com first! [:D]
Thanks! All help is greatly appreciated!!!! [Y]
Comments
1st question -- Is your plan a Section 125 (pretax deduction) plan? If so, if he does not have a qualifying event, you might have an issue with being able to stop the payroll deductions. So there may be a question as to whether he can quit mid-year.
You are definitely correct that the next time to enroll is at open enrollment (unless again there is some qualifying event).
You are going to need to check the insurance contract (or any other plan documents) to see how the grandfather clause is written. I have seen it both ways.
You also need to consider COBRA effects: If he didn't drop everyone, but kept himself on.....the others will become qualified beneficiaries under the COBRA rules, they would be allowed to rejoin at open enrollment. If he drops everyone and refuses COBRA for everyone, then they all lose the rights to COBRA and open enrollment changes. You could carry this thought forward to the fact that he would also lose the grandfathered eligiblity.
Yes, our plan IS a Section 125 plan. I don't believe him voluntarily dropping mid-year & stopping his payroll deductions is a problem, but I will have to double check on that........
So, now does that mean although he's voluntarily dropping coverage should he & his family receive a COBRA Election notice? Because that IS what he is doing - he is dropping his entire family from coverage.
I guess calling our broker is the best thing. (Sigh)
Your 125 plan document should detail when and if he can drop. Ours does not allow for it without a qualifying event. Here's a great website about "change of status":http://www.changeofstatus.com/resources/regs.asp
Here's a good posting on the Benefits forum I belong to:
http://benefitslink.com/boards/index.php?showtopic=39059
Very interesting...and makes some points better than I did!
HRforMe - thanks for sharing that website. I like it! I have added it to my resource links!![:D]
You are very welcome. I also have a good payroll one if anyone needs it. But I know most HR depts don't handle payroll (especially if the company falls under the Sarbane-Oxley Act which we do not).
Since I wear so many different hats, when I first started here in 2005, I searched out specific forums for each and managed to come up with some really good ones. Ones where there are gurus for that specific hat (payroll, benefits, etc) not just general HR. Because I don't really have any backup beyond the CFO and even then I know much more about the laws/best practices than he does.
Update:
I finally heard back from our broker and it turns out the employee IS eligible to re-enroll at our next open enrollment date or sooner if he goes onto another plan/policy and loses coverage there.
And I DO handle payroll too - as well as MANY other things (Benefits, Uniforms, Safety Committee, A/R, A/P, Cash Accounting, etc.). I would love the link to the paryoll forum website! And any others you might have - when I left my last company & took about 9 months off from working I "lost touch" with a lot of the forums I used there. My company doesn't know ANYTHING about HR, the laws, best practices, etc. They've been "winging it" for years & years and somehow managed to stay out of the courtroom thusfar! So I need all the help & back up I can get!
Thanks everyone!
I have had the BLR connection for over a year and unfortunately have never really used this function - I was unaware. I really do not have the time to navigate around due to the many hats
I do handle payroll and would LOVE a great reference site. I struggle with local taxes and some other issues, previousily never handled payroll and found it odd for HR to have this function but we do as we need to.
If you could please share the website I would be very grateful
Thank you
Sorry it's taken me so long to respond...I was on vacation last week [H]
The website is www.payrolltalk.com