Cancelling health Insurance Coverage Mid-Year

[Guest afreeling]

I was hoping someone would be able to point me in the right direction. I generally deal with Premium Only Plans and Flexible Spending Account plans, so I am very familiar with those rules but have been recently asked a question related to a participant cancelling a health insurance plan for the sole reason saying they can not afford it. This participant is on their employer's group health insurance plan currently. They are not part of a cafeteria plan and pay their premiums via a deduction from their salary on a post tax basis. Is this permissible or do the same regulations exist as they do for Cafeteria plans (1.125-4) that would prohibit this individual from cancelling their coverage without such event? Can you point me to the regualtion that would outline this? Thanks so much!

[Guest dsw713]

I'm not sure I can point you in the right direction, but I can tell you we are located in Ohio and I've had an employee do the same thing here. He couldn't afford to have the employee premium contribution taken out of his paycheck when he lost the coverage he had under his spouse. His child went on a state-funded program and he went w/o coverage completely.

[Guest mcapuano]

I was hoping someone would be able to point me in the right direction. I generally deal with Premium Only Plans and Flexible Spending Account plans, so I am very familiar with those rules but have been recently asked a question related to a participant cancelling a health insurance plan for the sole reason saying they can not afford it. This participant is on their employer's group health insurance plan currently. They are not part of a cafeteria plan and pay their premiums via a deduction from their salary on a post tax basis. Is this permissible or do the same regulations exist as they do for Cafeteria plans (1.125-4) that would prohibit this individual from cancelling their coverage without such event? Can you point me to the regualtion that would outline this? Thanks so much!

There is no such regulation that would prohibit a plan participant who is contributing premiums outside of a 125 cafeteria POP plan (Post-tax) from waiving coverage at any time.

[Guest afreeling]

Is this something that is regulated more by the insurance contract that the employer has with the insurance carrier?

[leevena]

As mcapuano stated, there is no regulation that prohibits an employee from dropping health insurance, or other coverages, at any time. Even if the participant is in a Caf. Plan, they can still drop their health insurance coverage. They just have a tax problem/issue.

The same is true for the carrier side. No carrier can prohibit an insured from dropping coverage. What may be confusing for some, is that carriers have underwriting guidelines that require a certain amount of enrollment. If an insured drops coverage, it may cause the plan participation to fall below the required minimum.

Hope this helps.

[Guest afreeling]

perfect. Thank you both very much. Have a great rest of the day.