Question on Exiting Employer Plan...

[G.Gordon]

Thanks for everyone's input, even Tater. Seems we're still at the same spot we started. It is in fact unaffordable by the math and her highest monthly hours worked over the past six months. I'm going to chock it up to "unclear" and advise the agent to leave it alone.

 

[LGilmore]

really then what we're talking about is an employer-employee issue. How big is the group? My guess may be that the group is not big enough to allow waivers of coverage, that may be why the pressure to stay insured from the employer. Otherwise, why would they care about an employee waiving off.


So yes, she can use the exchange, she can make a big deal of it and she can lose her job for a thousand of reasons, none that could be traced to something like this. But she could get her free insurance that way... sorry. I don't see this about the feds and what percentage of what. Her employer is telling her to stay put. How much does she like her job? I mean she is right, I've been right in the past myself. Being right sometimes costs you a lot of money.

 

[Ann H]

Gordon, it is possible that she is locked into a Section 125 Premium Only election.

Section 125 allows the employee to use pre-tax dollars to pay for their share of the premium. They are allowed to make or change that election at open enrollment, or at a qualifying event. Otherwise, it is good for the whole year. This is how some people find that they want to go off the employer's plan and yet they still get a deduction from their payroll for the premium. If anyone on this forum knows of new rules that allow a change to a person's Section 125 election upon qualifying for a subsidy, please speak up, because I do not know about one.

Other than Section 125, I don't know of a reason why the employer would insist that she cannot waive coverage mid-year. Of course, they may not want her to do so, for reasons of participation, or minimum group size, for other valid reasons. But I don't know that they can force her to stay.

I will warn you, like LGilmore and some others did, that it is improbable that the employee's share of the premium for the lowest-cost plan that the employer offers, which meets 60% actuarial value, really costs more than 9.5% of an employee's household MAGI income. Almost everytime I have calculated this out in the real world, the premium is less. To be less than 9.5%, it must be a very low-income wage earner, or a very high premium, or perhaps a taxpayer with a lot of above-the-line deductions that affect MAGI. Otherwise, the premium is usually mathematically affordable.

I hope this helps.

Ann

 

[G.Gordon]

Very insightful, Ann. Thanks. This person barely works enough to qualify for benefits and makes right at minimum wage at a facility populated by high aged employees. She is the youngest employee.

 

[RayNY]

Just a quick thought:

Maybe the employer is telling her she can't leave, because an employee leaving non-affordable employer coverage and obtaining a subsidy is the biggest fine defined under ACA.

(I recognize the penalty isn't in effect this year, and we haven't discussed whether this employer is even penalty eligible, but that doesn't mean the owner isn't making decisions based on incomplete information.)

I find it hard to believe that a business owner would set themselves up in such a way to potentially generate penalties over a silly 15 hundredths of a percent of the premium cost. 0.15% of her annual income is what, $32 per year at minimum wage?

 

[leevena]

There is no law/regulation that requires an employee to enroll, or remain on, an employer plan. This person can exit the plan at anytime they wish.

Now, as Ann has stated, if they are in a 125 plan there are financial consequences. But even so, if the employee wants to leave, they can.

 

[yorkriver1]

Maybe post this question over on employee benefits, in case any Section 125 administrators are active.

Wasn't able to find anything on a quick Google search. I have a faint memory of someone at my GA mentioning a 3 month waiver if the person goes off and back on a Section 125 POP, but that wouldn't usually apply in this situation
.