Can an employer just cancel your health insurance with out notice
Can an employer cancel your health insurance without notice?
Given the current state of the health care industry and recent changes in healthcare laws, it is common for workers to have questions about their healthcare coverage. What has not changed, however, is how much employees rely on their health insurance benefits provided by their employer. So what are your rights for coverage and does your employer have the right to cancel your insurance without providing a cancellation notification?
COBRA, ERISA, State laws, and Notification of Insurance Availability
The good news is that in most cases employers who participate in group healthcare plans will have to give notification to their employees if there is a material modification of the plan, including cancellation. Notification protections are outlined in the Consolidated Omnibus Budget Reconciliation Act (COBRA), ERISA, and state laws. More information is below:
- Protections under COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more workers to notify workers if their insurance coverage is going to change after a qualifying event. Not only should they be notified their insurance coverage is ending, but within 14 days of the event they must also be notified of their right to continuing medical coverage under COBRA. Qualifying events can include layoffs, resignations, reductions in work hours, death, divorce, and employment termination (for reasons other than gross misconduct).
- Protections under ERISA
Passed in 1974, ERISA established standards for insurance funding, fiduciary duties, vesting of benefits, disclosures, plan reporting, and participation requirements. Under ERISA, sponsors of a group health care plan must notify employees (who are eligible for the plan) of material reduction in services within 60 days of the change, and other modifications within 210 days of adoption. Unfortunately, laws regarding ERISA and cancelation notification have not been upheld in all courts (i.e. some courts have ruled that canceling a plan is not the same as modifying it and notification is not required).
- Protections under state laws
Certain states have also passed laws which require certain employers to notify employees if their insurance plan is going to be cancelled, there is going to be a change in plan coverage, or the employer is switching to a new insurance plan.
Group Health Insurance cancellations and notifications
Although regulations such as COBRA, ERISA, or state laws may require certain employers to notify employees that their insurance is canceled, there are some exceptions. For example, employers who change to a different health insurance company, who fail to meet the insurance company requirements, fail to pay the insurance premiums, who go out of business, or who have fewer than 20 workers may not be required to follow ERISA or COBRA regulations. Additionally, churches, certain government employers, or those with foreign insurance plans may also not have to provide notification.
What are my options if my insurance is cancelled?
If your health insurance has been cancelled you may have the right to purchase COBRA coverage for a specified time period. You also may have the right to purchase individual coverage on your state’s Health Insurance Marketplace outside the annual open enrollment. Talk to your human resources department to determine your options.