Employee wants to cancel Health Ins.

skippy · January 2002

Does anyone know if COBRA applies in the following situation? We have an employee who is covered under our company's health insurance; she and her husband are both covered under our plan.

She and her husband are ALSO COVERED under HER HUSBANDS company's plan.

Our Plan Year is July. She wants to cancel coverage with our company this month (January) and carry only coverage under her husbands plan for the two of them.

Can she cancel anythime? Do we have to send COBRA documents to him because he'll be losing some coverage? We have a Section 125 Cafeteria plan (plan year is July) bue she is not participating in it, although, THE COST OF HER INSURANCE IS BEING DEDUCTED PRE-TAX UNDER THE CAFETERIA PLAN.

I guess, now, I have two questions: The second is can an employee cancel insurance before the plan year if they've signed up for a Pre-Tax plan? Thank you in advance for any help you can provide.

Terry · January 2002

[font size="1" color="#FF0000"]LAST EDITED ON 01-24-02 AT 12:00PM (CST)[/font][p]I believe I am correct in saying that under Sect 125/pre-tax you can only cancel for a qualifying event. Generally speaking, if the coverage through her spouse is new, then, yes, she should be able to cancel. If it is an arbitrary whim, then she needs to wait until your open enrollment period.

WT · January 2002

To speak to your COBRA question, a person is entitled to COBRA coverage if they lose coverage through a qualifying event. Such events are well defined and include leaving employment, reduction in hours, death of employee, divorce or legal separation, dependent child ceasing to be a dependent, or employee's Medicare entitlement. None of these events apply in your case. The only thing you have to be careful of is if an employee cancels coverage "in anticipation" of an impending divorce. The spouse may be entitled to COBRA benefits then. Otherwise, I do not see how COBRA would apply to a voluntary cancellation of insurance benefits.

DeniseR · January 2002

What do you mean by she is not participating in the plan but she is paying for the premium on a pre-tax basis? If she is indeed paying on a pre-tax basis, then she is participating regardless. This also means that she is limited by the section 125 rules. This means that unless there is a family status change, or it's an open enrollment period, she is stuck in the plan. She can only get out if it's open enrollment. Explain to her that this is a federal law, not your company's law or the health insurance company's law. the reason I tell you this is because she will be quite upset (this happened to me with one of my employees) and the employee's will most likely call the insurance company to confirm that what you are saying is true. When she leaves (open enrollment), you don't have to provide COBRA letters. However, you DO have to provide a certificate of creditable coverage upon termination of insurance. Hope this helps. Any questions, feel free to e-mail me at [email]Deniser.HQ@Keyence.com[/email]

Min · January 2002

Look at your medical plan contract papers. I do know that we (because we pay all of the premiums) have to have 100% participation- if eligible, they receive the medical whether they want it or not. I was informed, by our insurance administrator- that if an employee wants to drop a dependent or spouse, they can do that at anytime, not just at renewal time. Check with your insurance administration company. That is what they are there for. I also know that I have had to send out COBRA papers because when the dependent or spouse is dropped, it is a change in coverage, and they do need to be made aware of the change.
Hope this helps a little.

skippy · January 2002

Thank you all for the valuable information. You're right - we were not able to cancel the insurance - she must stick with the plan. These forums are great. Thanks again

kansasliberal · April 2003

Can employees be automatically signed up for insurance if they do not respond to the information packet mailed to them? Premiums are partially paid by employee? Thanks for any help on this.

LindaS · April 2003

Does your policy call for automatic enrollment? Our policy states that all employees must carry at least single coverage and we, the employer, pay a certain percentage of the premium. If your plan does not call for this, you should NOT automatically sign them up.

At a previous employer I ran into this problem several times - I would sit down with the ee to sign them up for the various insurance plans (having provided them with all the SPDs in advance as well as a letter stating the date and time we would meet as well as what information they needed to bring with them) and the employee would not have the required information or they had not yet made a decision regarding what they did and did not want to enroll in. I would give them more time to look at the information, or to obtain whatever information they needed, and schedule another date and time to meet. If, after the second meeting they still did not have the necessary information, I would follow up with one more letter (no scheduled meeting) and if I did not receive a response, they would not be enrolled in the plan.

My thought is that I had TOO many other issues to deal with and I was not hired to be their babysitter, they are adults and should act like it. I actually did have one employee who had a back injury, and did not sign up for the insurance due to lack of him providing information, and after w/c denied it tried blaming me for his not being on the plan. I made sure I had documented everything and he ended up being responsible for the medical bills.

Terry · April 2003

I would not automatically sign them up especially if they pay part of the premium. All states dictate what can and cannot be deducted from an employees paycheck and if you do not have their signature agreeing to the insurance worse case senario is that you get stuck for the premiums. I use to made a check list form/summary sheet that listed the insurances available and forms required to enroll, sometimes it included the costs too. It made it easy for the employee to see options available and what they needed to do to enroll. The bottom of the form contained a statement that they understand by enrolling in any of the above would result in a payroll deduction and a line for their signature/date. I use to work for PEO and we had one client that ended up paying for 100% coverage (regardless of level!)because he didn't get any signatures and didn't know how to address it after the fact.

kansasliberal · April 2003

Thanks to all of you for your help. I really appreciate it.

Kansasliberal

shendrickson · January 2002

I agree with the others, Cobra does not apply in this instance, and unless the coverage plan her husband has is new, she would not be allowed to drop her current coverage until the "open enrollment period". There must be a significant change in family status in order for her to cancel prior to the open enrollment period.

franfields · January 2002

I understand they cannot drop insurance midyear without a status change but it seems so unfair to tell someone they have to spend money when they may, for whatever reason, not want it or, even worse, not be able to afford it.

DeniseR · January 2002

you are right, but then you should take teh premiums pre-tax. If they were paying post tax, then we wouldn't even have an issue. They can drop and add any time they want.

Employee wants to cancel Health Ins.

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