General thoughts on unqualified members

[Guest Richard Bellamy]

We have just determined that our company's health plan only covers employees who work "full time," defined as 30 hours or more. For the past several years, we have included several employees in the plan, who have worked 20-25 hours. These employees were not, in fact, eligible to participate.

We are entering open enrollment now. We will have to tell these employees that they are "losing" their health coverage. Any thoughts on how to deal with them? They have to be kicked off the plan (I assume). They are not eligible for COBRA (I think? There was no "qualifying event.") They will ask, "What do I do now to get health insurance."

Any general thoughts would be appreciated.

[QDROphile]

Examine your assumption that they have to lose benefits. In all likelihood that is a policy decison.

[MARYMM]

The insurance contract could be revised to allow this coverage. If your employees contribute a portion of the premium, you could consider charging those who work 20- 30 hour a week more than those who work 30 hours . Even if you don't have contributions now, you could establish them for the part-timers.

[jpod]

It depends on what the gropu contract says. If they were ineligible, then they are still ineligible, and they are not losing coverage as a result of a qualifying event so you're right there is no COBRA. You also may be sued by the employees who were led to believe that they would have health insurance and COBRA rights, under what legal theory I am not exactly sure, but you should expect to be sued.

[Guest morris]

If the provided coverage was a mistake, then shouldn't any premiums paid by those employees be reimbursed also? (if applicable)

Hopefully the Plan document/SPD has an errors clause in it.

Agree partially with jpod re potential lawsuit, especially if somebody became uninsurable during the coverage period.

[JanetM]

jpod is right your are just asking to be sued. As to the statement that they don't quality for coverage, I am going to assume that when they first started working they worked the full time 30+ hours, then had a reduction in hours so they should have been deemed ineligible for the plan. The is qualifing event for COBRA. Now if the never worked over the 30+ hours and received benefits anyway, the ER erred.

My advice is go the carrier and negotiate a way to keep these folks in the plan if you can. You may require the pay a bit more than the full timers, but in the economy and social setting we have today, you don't need this kind of bad press. You want to be tagged by the occupy (insert city name) as part of the greedy 1% who are out to destroy the world and enslave us working smucks?