WHAT IF EMPLOYEES DECLINE GROUP
HEALTH INSURANCE
There are a few reasons an
employee may choose to decline
coverage offered through their
employer-sponsored group health
plan. It is more common
these days for employers to
require the employee to
contribute a percentage or the
difference above a fixed dollar
amount to the employee's health
insurance coverage and/or
dependent health insurance.
An employer may also have their
own coverage even on an
individual/family basis or
through a spouse's group health
plan. Whether an employee
(or dependent) has
individual/family or group
health coverage can
significantly affect them if
they decline health benefits.
Let's take a quick look at the
implications of such a decision.
An Employee declines group
health insurance
An employee has the choice to
decline coverage at the time of
initial eligibility. The
period of initial eligibility is
usually when an employee has met
his/her waiting period after
initial hiring or obtaining full
time status (if part time
employees are not covered).
All newly eligible employees
need to either enroll in
coverage or declined coverage.
If the employee declines
coverage, and is not on another
group (employer-sponsored)
health plan, he/she may need to
wait till anniversary date to
come back onto the group plan.
This is also true for
dependents. The key is
whether they have other group
health insurance. If they
lose their other group health
insurance, they can come back on
board any time (1st of the month
following the application
submittal and qualifying event).
It is very important that
employees who choose to decline
coverage understand that this
factor and how it affects their
ability to come on board.
The application has a section
where they need to sign to this
fact but it make sense to key
them into how this works.
An employee can choose to accept
coverage for himself/herself and
decline coverage for certain
dependents but the same rules
apply as mentioned above.
An employee cannot declined
coverage for himself/herself and
accept group health insurance
for dependents however.
Focal renewals and employees
opting for coverage
There may be times during the
year where some carriers allow
employee changes such as
off-anniversary enrollment.
This usually occurs during focal
renewals which basically means
Statewide rate and benefit
changes. This tends to
happen once a year but an
employee cannot count on be able
to come back on board at that
time. This is also a
function of the carrier and what
they allow. Some carriers
apply the rate increases at the
group's specific anniversary
date in which case, there is no
difference.
Employees declining coverage and
participation requirements
Another issue with employees
declining coverage is how it
affects the group's ability to
qualify based on participation
requirements. As part of
AB 1672 and guaranteed issue
qualifications, 75% of eligible
employees must go with the
health (or dental) plan.
If a sizable number of eligible
employees decline coverage, it
can cause the group not to
qualify for coverage. This
is usually an issue when the
employer requires a sizable
contribution from the employee
which they feel they cannot
afford. Even if a group
originally qualifies and meets
this requirement, declinations
or changes in total number of
eligible employees can cause the
group not to qualify at the time
of renewal or if the group
decides to re-qualify. The
employer may want to re-evaluate
how much the company will
contribute towards the coverage
in order to entice more
employees to enroll (or better
yet, not to decline).
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center
