Employer wants to prevent Employee from moving from one plan to another even with Qualifying Event

[waid10]

Hi. My employer offers multiple health plan options to employees. The employer is considering amending the health plan to prevent employees from making a mid-year change (moving from one plan to another) even if the employee has a Qualifying Event. The employer wants to avoid the opportunity for adverse selection. Is it permissible for an employer to implement a ban like this (where an employee, with a valid QE, is not permitted from moving from say the employer's Gold plan to the Silver plan)?

[Brian Gilmore]

It depends on the event.  If it's a HIPAA special enrollment event, the employer will have to offer the ability to change medical plan options.  Otherwise that's not required (and typically not offered).

The following events qualify as HIPAA special enrollment events:

• Loss of eligibility for group health coverage or individual health insurance coverage;
• Loss of Medicaid/CHIP eligibility or becoming eligible for a state premium assistance subsidy under Medicaid/CHIP; and
• Acquisition of a new spouse or dependent by marriage, birth, adoption, or placement for adoption.

 

Here's a quick summary and an example confirming from the regs:

https://www.newfront.com/blog/hipaa-special-enrollment-events-2

HIPAA Special Enrollment Events: Right to Change Plan Options

Upon experiencing a HIPAA special enrollment event, the plan is required to allow the employee to select any medical benefit package under the plan (e.g., move from Aetna to Blue Shield, Anthem to Kaiser, HMO Low to PPO High, etc.).

...

29 CFR § 2590.701-6(b):

Example  (2)  (i) Facts. Individual D works for Employer X. X maintains a group health plan with two benefit packages–an HMO option and an indemnity option. Self-only and family coverage are available under both options. D enrolls for self-only coverage in the HMO option. Then, a child, E, is placed for adoption with D. Within 30 days of the placement of E for adoption, D requests enrollment for D and E under the plan’s indemnity option.

(ii) Conclusion. In this Example 2, D and E satisfy the conditions for special enrollment under paragraphs (b)(2)(v) and (b)(3) of this section. Therefore, the plan must allow D and E to enroll in the indemnity coverage, effective as of the date of the placement for adoption.

 

Here's a short overview from the DOL's FAQ piece:

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/hipaa-consumer.pdf

What coverage will I get when I take advantage of a special enrollment opportunity?

Special enrollees must be offered the same benefits that would be available if you are enrolling for the first time. Special enrollees cannot be required to pay more for the same coverage than other individuals who enrolled when first eligible for the plan.

 

Here's a quick slide summary:

Newfront Office Hours Webinar: Section 125 Cafeteria Plans

[waid10]

Thank you @Brian Gilmorethis is very helpful.