Q.- An employee enrolled in our health plan wants to drop coverage. Can we let employees cancel coverage whenever they want?
A.- If your health plan is offered on a pre-tax basis through a Code section 125 cafeteria plan, employees cannot just drop coverage whenever they want. The cafeteria plan rules say that once an employee makes an election to enroll in the plan, coverage must remain in effect for the entire plan year unless the employee experiences a qualifying life event as recognized by the IRS. The IRS only permits mid-year changes to coverage elections under specific circumstances, including:
- Marriage, divorce, or legal separation
- Birth, adoption, or placement for adoption of a child
- Death of a spouse or dependent
- Loss or gain of other group health plan coverage, such as a spouse’s employment-related coverage
- Change in employment status (e.g., part-time to full-time, termination of employment)
- A dependent ceasing to be eligible for coverage
- Entitlement to Medicare or Medicaid
- Court order requiring coverage for a dependent child
- Change in residence out of a coverage area that changes eligibility for coverage
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
