Cancelling a Health Plan

[Guest acarney]

Can anyone clairify an employer's responsibility in communicating the cancellation of a health plan to their employees? I believe there is a specific document or letter to outline the loss of coverage, but can not locate it on the DOL site.

Thanks...

[jmor99]

Does the SPD expand on this in any form?

[GBurns]

Are they cancelling the health plan or are they cancelling the health insurance coverage?

[Don Levit]

George:

Good response.

There IS a difference between a plan and the coverage it provides.

Don Levit

[Guest acarney]

Can anyone clairify an employer's responsibility in communicating the cancellation of a health plan to their employees? I believe there is a specific document or letter to outline the loss of coverage, but can not locate it on the DOL site.

Thanks...

[Guest acarney]

The client is cancelling the retiree health plan all together. Everyone will need to go to an individual plan with a Medicare D drug card or access a different group plan through their spouses. No COBRA will be offered as there will be no plan in place...

[Guest b2kates]

will they be continuing the health plan for active employees?

[Guest acarney]

Yes. They will be continuing the plan for the active employees.

[leevena]

I don't believe there is an actual letter, rather, there are guidelines about what you need to communicate and how it needs to be communicated.

Since you are no longer offering retiree's coverage, I would suggest you pay particular attention to all of the details. This has become a contentious subject over the past few years. As someone mentioned earlier, check all of you documents and communications about this subject. Additionally, check state law for anything applicable to your situation.

A suggestion...you may want to make your announcement as early as possible so to give them additional time.

[Guest AMP]

Presuming this is a plan subject to ERISA, ERISA Section 104(b) requires that notice of any material reduction in covered services or benefits under a group health plan must be provided to participants and beneficiaries within 60 days after the plan amendment causing the material reduction is adopted. There's no form letter or notice.

However, the general fiduciary duty of loyalty under ERISA Section 404(a)(1) obligates a plan fiduciary to disclose information known to the fiduciary if the fiduciary knows or reasonably should know it would be important for a plan participant or beneficiary to have that information, even if the participant or beneficiary doesn't ask for that information. Under that general fiduciary duty of loyalty, you really need to notify the retirees who will be losing coverage as soon as possible so they can make other arrangements for coverage.

And make sure the SPDs provided to these retirees at the time they retired clearly state that the plan sponsor reserved the right to amend or terminate the coverage at any time. It's very possible your retirees will legally challenge your right to terminate the retiree coverage entirely.