Employee Drop ER Coverage and Get Individual

Discussion in 'Employee Benefits Forum' started by floridashores, May 12, 2017.

  1. floridashores
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    floridashores New Member

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    So, I can't get a straight answer on this. Maybe my colleagues can help!

    Scenario 1: ER renews 8/1/2017. EE doesn't want the ER coverage. Can the EE then get an individual plan (on or off marketplace, no subsidy) if it's not open enrollment in the individual market?

    Scenario 2: ER renews 8/1/2017. EE enrolls in ER plan. Then, the individual open enrollment period begins and EE wants to instead get her own plan. Can she leave her ER's plan end of December for a 1/1/2018 Individual plan?

    ER has a Section 125. ER offers affordable and qualified health insurance.

    Truly cannot get a straight answer on this.

    Thanks for any input.
     
  2. kgmom219
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    kgmom219 Well-Known Member

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    If you asked 3 lawyers on this, you would get 3 answers.

    The practical answer? Remain enrolled in ER coverage through 12/31 and start ACA coverage on January 1.

    Whoever is administering the Section 125 plan is actually the determining body. But I bet if you asked 3 people there, you would get 3 answers again.
     
  3. glgamerica
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    glgamerica Well-Known Member

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    Situation #1: Yes, they qualify for a special enrollment period.

    Your job-based health plan is ending for the year and you choose not to renew it. Note: If the plan is affordable and meets minimum value standards, you can buy Marketplace insurance but won’t qualify for a premium tax credit or other savings.

    Source: https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/

    (under losing job-based coverage)

    Situation #2: It would seem so although I couldn't find the exception in the code.

    See example 4 page 3, change in status.

    https://www.washcoll.edu/live/files/5502-section125qualifyingeventsrevisedjune2013nfppdf

    I would guess no subsidy and a 30 day window to do it.
     
  4. LGilmore
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    LGilmore Well-Known Member

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    I would just talk to the employee about the choice.
     
  5. rcduggan
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    rcduggan Well-Known Member

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    Scenario 1: ER renews 8/1/2017. EE doesn't want the ER coverage. Can the EE then get an individual plan (on or off marketplace, no subsidy) if it's not open enrollment in the individual market? Yes, called voluntary termination and more than 99.9% of the time will not be allowed a subsidy. SEP applies from loss of grp coverage.

    Scenario 2: ER renews 8/1/2017. EE enrolls in ER plan. Then, the individual open enrollment period begins and EE wants to instead get her own plan. Can she leave her ER's plan end of December for a 1/1/2018 Individual plan? Yes, again same voluntary termination from grp and similarly, no subsidies will apply.

    This EE will NOT be allowed to use pre-tax dollars to purchase an IFP plan, period (no participation in a Section 125 plan).
     
  6. kgmom219
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    kgmom219 Well-Known Member

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    Subsidies will NEVER come into play. Its called the family glitch ;)

    Just because you want an Indy plan, doesn't mean you want a subsidy
     
  7. rcduggan
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    rcduggan Well-Known Member

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    The part about "NEVER" is inaccurate as our state group exchange ALLOWS subsidies for dependents when the right box is checked on the master app ;)

    Also, if the current employer sponsored plan offerings are in excess of 9.whatever percent of household gross income. Never say never
     
  8. yorkriver1
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    yorkriver1 Well-Known Member

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    All I know is that my GA's compliance dept warns against invalid POP/Section 125 drop outs, because if they violate the POP plan document/tax rules, the whole plan and all employees lose tax deductible status.
     
    Last edited: May 22, 2017
  9. kgmom219
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    kgmom219 Well-Known Member

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    Ok. Sorry.

    If you lie on the form in CA, you can still get a subsidy.

    But you are right. Never should never be used when dealing with health insurance
     
  10. Dave020
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    Dave020 Super Moderator Moderator

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    No lie.

    Covered CA SHOP allows employers under 50 employees the option to offer "employee only" group coverage. If they check the employee only box, Covered CA allows the spouse and dependent children to purchase IFP with subsidy (no family glitch applies).
     
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