EMPLOYEES CAN TERMINATE BENEFITS AT ANYTIME

An employee can willingly terminate their health insurance at anytime.  If the employee is still employed with your company and wishes to end health benefits they were previously enrolled in, they can reach out to the benefit administrator to request a termination of benefits. Most insurance carriers will terminate benefits at the end of the month that the termination was requested.

As an example, if Employee Fred requests a termination of his medical insurance on September 4th, the insurance carriers would require his benefits remain active for the entire month of September. Benefits would not longer be active beginning on October 1.

A few reasons an employee may wish to terminate their group health benefits are:

• Enrolling on spouse/partner benefits
• Enrolling with Medicare
• Voluntary benefits aren’t being used

EMPLOYER PAID BENEFITS: TERMINATE IN A TIMELY MANNER

As a benefit administrator, you will need to know the rules of your carrier contract for each benefit. Depending on employer contribution levels, some carriers may require all employees remain active on the plan. This is usually only required when a benefit is paid 100% by the employer (free benefit to the employee). The most common benefit paid by the entirely by the employer is group term life. Some term life is tied to medical insurance enrollment. This means that if they want to term their medical insurance with the employer, then you can also term the employer-paid life. Standalone employer-paid term life may require that all employees, regardless of other benefit enrollment, must remain enrolled and paid by the employer.

Be sure to review your carrier requirements. If you aren’t sure of the requirements, reach out to your health insurance broker or contact the carrier directly.

TERMINATING BENEFITS FOR AN EMPLOYEE WHO LEAVES THE COMPANY

If an employee terminates employment, either voluntarily or involuntarily, they usually can continue to use their benefits for the remainder of the month depending on the termination date. Just like a voluntary termination of benefits, those who leave employment or are fired will continue to have benefits through the end of the month based on their last day worked.

For example, Employee Fred quits his job on May 3rd. He gives 2 weeks notice to his employer. Fred works his entire 2 weeks notice with his last day of work being May 17th.  This means that Employee Fred will continue to have insurance through the last day of May with benefits no longer being active on June 1.

If Employee Sarah is fired on March 31st (the last day of the month in March), Sarah’s benefits will remain active through the end of that day and will no longer be active beginning the next day, April 1st.

HOT TIP: It is up to the employer to report terminations in a timely manner! All carriers have restrictions when it comes to retro-terminations (terminating in the past). Carriers want to know about terminations within 30 days of the termination date. Some do allow terminations to go backwards up to 60 days, but this isn’t a guarantee and may require approval.

If using a benefit administration software, update terminations as soon as you are aware of them. If managing benefit adds and terms manually, be sure to let your carrier or broker know as soon as possible.

WHAT TO EXPECT ON YOUR BILL FOR TERMINATIONS

Employers who purchase group health insurance usually receive one bill per carrier. This bill will include the monthly premium for every employee. You will usually see a detailed breakdown per employee and/or billing tier group, depending on your plan and carrier. Bills (also known as invoices) are cut by the carrier up to 2 weeks before the invoice due date. However this can vary greatly. It is important to remember that if an invoice is cut on the 14th of the month and you submit a termination request on the 17th, it may take up to 2 billing cycles (2 more invoices) for a credit of the terminated benefits to appear.  These will usually appear on a separate line item.

HOT TIP: As the employer, you are responsible to pay the ENTIRE invoice regardless of pending adds or terms. If Employee Fred quit and you terminated his benefits but he is still showing on the invoice, we recommend you continue to pay the invoice in full. You can always reach out to the carrier to validate the termination is in their system ensuring it will be credited on the next invoice. However, always recommend to pay invoices in full and dispute charges or request corrections after it is paid.

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HEALTH INSURANCE ELIGIBILTY

One of the most important details to review when an employee is asking about insurance is if they are eligible for insurance. Who decides eligibility? The employer does! Employers are required to determine a minimum hours worked per week before someone is considered eligible. While you may hear a lot of employers say eligibilty is determined by full-time hours, that is very unique to each company. Be specific when discussing eligibility by expected hours of work per week. A lot of smaller employers may allow an employee to enroll at 30 or 35 hours worked per week.

Be sure to list eligibility requirements for health insurance in your employee handbook!

PROBATIONARY PERIOD

One you know an employee is eligible based on their hours, now they must wait the probationary period. Employers pre-determine a probationary period for health insurance benefits. A probationary period is the amount of time an employee must work before they are eligible for benefits.  One of most common probationary periods is “first of the month following 60 days”. Sometimes you may see this abbreviated as FMF 60 or FMF 60 Days. This means that an employee must be employed and eligible for 60 days from the date of hire. Benefits will then being on the first of the month following that 60th day.

Additional probationary periods are 90th day of employment and first of the month following date of hire.

Some employers have set different probationary periods for an employee who moved from part-time (or non-eligible work hours) to full-time (or eligible work hours). Some employers allow an employee’s probationary period to be retro-active from their date of hire. This means the employee was probably already enrolled for 60+ days prior to meeting the work hour eligiblity. With a retro-active probationary period, an employee could begin benfits the first day of the month following their move from part-time to full-time.

Other employers require the probationary to be met from the time an employee becomes full-time or begins working the required hours per week. In these instances, the probationary period would need to be met just like a new hire.

If you are unsure what your probationary period is, reach out to your insurance broker or directly to your insurance carriers. If you want to adjust your probationary period, make sure you bring this up with your insurance broker at the time of renewal. Probationary periods are determined when beginning a new policy or can be adjusted at time of the policy renewal.

IMPORTANT RESOURCE: Need help calculating an employee’s health insurance effective date?

Check out our benefit effective date calculator!

OPEN ENROLLMENT

Open enrollment is an annual event for every employer who offers health insurance benefits.  Open enrollment happens at the time of your policy renewals. Your company may have decided to renew the same policy they are currently using or they may choose to move to a different insurance carrier. Whatever the decision is, open enrollment will happen every year at the time of renewal and is an opportunity for all eligible employees to make changes to their current health insurance elections.

At open enrollment, an employee who previously waived insurance could choose to enroll. Another employee could add their spouse and/or children who were not previously on the plan. If you offer multiple health insurance plan choices, open enrollment is the time for them to change what insurance plan they are currently on.

Most open enrollments occur 30+ days before the renewal date and/or policy begin date.

HEALTH INSURANCE QUALIFYING LIFE EVENT

Qualifying life events are a major life event that allows an employee to make changes to their health insurance elections outside of open enrollment and being newly hired. Qualifying events allow them to make changes just like they could at open enrollment, however, there are very specific events which will trigger a qualifying event change, sometimes referred to as a special enrollment.

Some examples of a qualifying life events are:

• Marriage
• Divorce
• Birth of a child
• Adoption of a child
• Loss of coverage

For a comprehensive list of qualifying life events, read your group administrator guide, policy details for visit Healthcare.gov.

REMINDERS FOR GROUP ADMINISTRATORS

If you are tasked with managing your company’s health benefits, you are most likely considered the group administrator for your company health insurance policies. Group administrators can reach out to your health insurance carriers (i.e. Regence, Premera, UHC) and discuss employee enrollments, policy rules and more. Don’t be afraid to reach out to your health insurance broker or the carrier directly if you have any questions.

Most importantly, don’t forget to put details of employee benefits in your employee handbook! Include health insurance benefit details such as probationary periods, eligibility requirements, and employer contributions towards insurance premiums. Be sure to include instruction regarding how benefits will be managed, offered or paid for if an employee goes on leave such as approved un-paid leave, maternity leave and more.

For additional information regarding group health insurance, reach out to HR Resource, Inc. We are a team of brokers who are committed to helping businesses of all size offer benefits for their employees without the headache! HR Resource, Inc. has been serving the health insurance and life insurance needs of employers in Snohomish County and Washington state for over 20 years.  If you are in need of a group health insurance quote, or are looking to change up your current offerings, reach out to HR Resource today! Even if you are currently working with an insurance broker, we would be happy to discuss your needs and help you make decisions that are best for your company and employees.

CONTACT HR RESOURCE FOR YOUR GROUP HEALTH INSURANCE QUESTIONS!

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