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Cancellation for non-payment of premium

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I'm working with an employer who has employees who do not work over the summer.  They will continue to be covered under the employer's group health insurance plan but must pay for their portion of the premiums which would otherwise come out of their paycheck.  We are concerned about what happens if the employee does not pay their portion of the premiums.  My understanding is that there is a 30 day grace period under the ACA and that if the policy is canceled for non-payment, the employee is not eligible to re-enroll until the next open enrollment period.  My questions are:

1) Is it correct that there is a 30 day grace period under the ACA?  

2) If so, do you know what statute or regulation requires it?

3) Can state laws require a longer grace period (I believe they can for individual plans but can't find any information on group plans)?

4) Is it correct that they cannot re-enroll until the next open enrollment?  Any cite for that?

Thank you so much for any help you can give me.

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I am assuming the plan is a group policy, is that correct?  First, please check the plan documents for cancellation for non-payment of premium provision.  Most group plans allow for a 30-day period, but it could be longer.  This is a state requirement and not ACA.  I do not know of any state that requires longer than 30-days.  When an employee loses coverage they usually need to wait for open enrollment time, which is also in the plan documents.



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Since the employees are paying their premiums pre-tax, there should be a premium only cafeteria plan and the rules applicable to employees on an approved unpaid leave of absence should be described in the Plan document. There are several options employers may provide to employees to pay their share of the premiums while on an approved unpaid leave of absence which are covered in IRS regulations.

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If you are a large employer, see 26 CFR § 54.4980H-3(g) HERE

If your employee’s payment is late, you must provide the employee with a 30-day grace period in order to make the payment. If your employee does not make the payment within the grace period, you are not required to provide coverage for the period for which the premium is not timely paid and may terminate coverage. In addition, you are treated as having offered that employee coverage for the remainder of the coverage period (typically the remainder of the plan year) and cannot be penalized for terminating coverage if the premium is not paid. Similarly, if the employee makes a partial payment that is "not significantly less" than the total amount due (the lesser of 10% of what is due or $50), you must either accept the deficient payment as payment in full or notify the employee in writing of the underpayment and give the employee a reasonable amount of time to pay the remaining balance.


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