Change in Status Due to Premium Increase

[Guest caseylaw]

An employee has family coverage with the employer paying 100% of the employee cost and payroll deducting the dependent cost. Premiums increase for the family coverage from 436.65 to over twice that amount. The spouse and child are eligible to be covered under her employers plan but the spouse's TPA claims that a this is not a change in status so she has to wait until her employer's next annual enrollment. Would this not be a change in status and she be able to elect as a late enrollee prior to the annual enrollment? Their claim is that the change in status has to be involuntary. She can elect the coverage for her and the child at a much reduced rate with her employer.

[papogi]

The TPA is correct. This rate increase might be enough for the employee to drop coverage for the spouse if he doesn't want to pay for the big increase, but this would be a voluntary drop. As far as then going on her employer's plan, HIPAA offers no mandatory avenue for this.

[Guest caseylaw]

So when would the significant premium increase apply?

[papogi]

Significant premium increases would allow an employee to change to a lower cost option offered by the same employer or to drop coverage if nothing similar exists. That would be fine if there is other coverage already in place (i.e., dual coverage). If there isn't other coverage already in place, the provision can't force another plan to pick up the people dropping coverage. The provision is still useful, it's just not as sweeping as you'd like.