Canceling health insurance with the company your work for?
A gal at work is having some problems canceling her health insurance with the company we work for. Our company is saying she CAN NOT cancel her health insurance policy with BCBS since its not open enrollment. The reason she wants to cancel is because she got coverage with a different company. Is it legal for our company to say she CAN NOT cancel her policy??? How could she afford to pay for both!
August 8th, 2010 at 12:31 am
Yeah? It sounds like the gal at work fails to understand the concept of group health insurance. There are open enrollment periods. There are mandatory participation rules.
Either she cancels her other policy (not BCBS) or she quits her job.
August 8th, 2010 at 1:24 am
She can cancel at anytime by filling out a form declining coverage. Maybe HR doesnt know that. May think that only at open enrollment can be made.
August 8th, 2010 at 2:17 am
Or she pays for both until her work insurance open enrollment period. She should have research before she committed to the new insurance, should have looked into what the company’s insurance policy said or asked the Human Resources/Insurance management dept. about the opting out. The company gets a certain rate depending on the number of participants so people cannot just sign on or opt out at will.
August 8th, 2010 at 3:15 am
it is not the employer it is the Insurance company they have there rules and she must abide by them, they only way she can do it is with a qualifying event and getting other insurance doesn’t count, as one said she either quits or cancels he other insurance until open enrollment, it can’t be done any other way
August 8th, 2010 at 3:44 am
Those rules are determined by the agreement made between the insurer issuing the group plan and her employer. She’ll have to wait until the “open enrollment” period.
August 8th, 2010 at 4:08 am
It is not the company that says this, it’s the insurance company. The insurance company only allows for changes during open enrollment or if there is a significant life event, such as marriage, birth of a child, death of an immediate family member, etc. This is the only time changes can be made.
Why does the insurance company do this? It prevents people from getting insurance only when they need it and not being insured when they don’t need insurance. For example, most people only visit the dentist once every 6 months. If an insurance company allowed participants to sign up and cancel their insurance at any time, then you could sign up for dental insurance the month that you are going to the dentist (so that the insurance company will pay) and then the next month cancel the policy because after all you won’t be going to the dentist for another 5 months. Then you could sign up for dental insurance the month you go to the dentist, then immediately cancel. While less common, the same thing can be true for health insurance. A person could decide to get health insurance one month, when they know they have to go to the doctor (i.e. they just came down with the flu and need to go to the doctor) and then once they are well again cancel their coverage.
I completely empathize with your co-worker. If a person doesn’t understand insurance very well, then it would make sense that the company should allow her to cancel her health insurance. Whoever helped her get health insurance through a different company should have reviewed this with her so she wouldn’t have to pay premiums for two health insurance policies.
August 8th, 2010 at 4:59 am
Its from federal IRS regulations regarding pre-tax benefit plans.
There are very specific regulations from the IRS regarding open enrollments and when a person can drop coverage. The ONLY way to drop coverage when is not open enrollment is to have a “qualifying event.” (The HR department should be able to provide you/her a list of qualifying events, for reference.)
If she doesn’t meet the definition of a “qualifying event,” then she has to keep the coverage until open enrollment. There’s nothing that can be done, other than quitting the job. The employer’s hands are tied, due to the IRS regulations.
She should have investigated this BEFORE obtaining other coverage. These coverage rules/IRS regulations are very well-known and apply to ALL employers who offer such plans. This isn’t some new-fangled thing that your employer came up with on their own.
August 8th, 2010 at 5:38 am
Right. She cannot cancel her health insurance, unless she quits her job.
Getting new coverage with a different company is NOT a qualifying event, in accordance with the IRS, to allow you to CANCEL coverage.
Except for death or divorce, you can only ADD coverage, during a qualifying event. You can’t delete, except for open enrollment.
This is the law, and it’s an IRS tax law. It’s not the employer making this decision. Not only is it legal for the company to make her keep carrying coverage, it’s required for them to do it – by law.
If she’s dropping one plan, it will have to be the new plan. Sorry.
August 8th, 2010 at 6:35 am
Please tell your friend at work NOT to cancel her group policy. The cost may be higher, but she may have a rude awakening on the back end of her personal insurance when something goes wrong. Personal insurance is notorious for “straining a gnat” when it comes to coverage.