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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Recently in Group Health Insurance Category

Question: I have a Covered California policy with premium tax credits because the employer coverage was unaffordable (more than 9.69% of income for employee-only). In September, I picked up a second part-time job. Now my employer’s insurance would be less than 9.69% of my total income. I can’t sign up for my employer plan until next June. What should I do? When I file my taxes will I be required to pay back my subsidy?

Answer: As long as Covered California determined you were not eligible for affordable job-based coverage when you initially applied, that determination will hold for the remainder of the year. The IRS refers to this as a “safe harbor,” and won’t require you to go back and re-compute the affordability of your job-based coverage at year end when you file your taxes.

As for 2017, you should report your income change to Covered California as soon as possible. They will determine your new eligibility for premium tax credits, based on your higher income, and adjust the level of subsidy going forward. In June, you can enroll in employer coverage and cancel Covered California coverage.

Question: Can you discuss how an HRA (not HSA, but HRA) account affects the plans you can select and any financial assistance it may affect.

Answer: A health reimbursement arrangement (HRA) is an agreement between employer and employee to reimburse out-of-pocket medical expenses. The idea being that the employer can save money on insurance costs by purchasing a high-deductible (cheaper) health plan. Then compensate the employees for the loss in benefits by reimbursing their out-of-pocket expenses not covered by the group health plan or expenses subject to the deductible. HRA's are very flexible. They can be all-inclusive to cover any tax-deductible medical, dental, or vision expense or very limited - for example only covering the first $100 in expenses annually. As a IRS approved employee benefit plan, HRA's deliver tax benefits for both employer and employee, that is: the employer's payments are tax deductible and the employee reimbursements are pre-tax benefits.

The IRS requires that the HRA be combined with a fully-funded group health insurance policy. You cannot receive the tax benefits associated with an HRA if you create a stand-alone HRA - one designed to work with individual health insurance coverage. Only HRA plans that are attached to a conforming group plan can be used going forward.

Big Income Change?

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Question: We're a household of 3, husband at 55, wife at 46 & son at 14. My husband is quitting his job by the end of Sept 2015. YTD income at that point is $250K+ but the last quarter will be zero. Because he's starting something on his own, he will have zero income in the coming year or so while starting something from scratch. We probably opt out of using COBRA (too expensive). Here are my questions: 1. Given we have high income for 3/4 of the year but zero for the last 1/4, will we qualify for Cvered CA? If not, any other option? 2. If we can apply for the last 1/4 of the year for Covered CA, will we get premium assistance now that we are at zero income level? 3. For next year 2016, my husband will continue having zero income while I will try to get "part-time" job. Do we need to report any new income in mid-year once I find a part-time job? Basically, how it works when our income change during the year? Thanks for your advise in advance.

Answer: When your employer-based health plan terminates - let's say September 30, 2015 - you can sign up for individual health insurance through Covered California even though you will not be eligible for a subsidy in 2015. Then, sometime before December 15th, you will adjust your household income at Covered California to estimate your 2016 income. If that estimate falls within the premium assistance range ($28K to $80K for a 3-person household), you can receive a subsidy to help pay your premium until your income is once again beyond subsidy range. Your 2016 estimate does not have to be accurate, any excess subsidy you may receive will be returned when you pay your 2016 taxes and vice versa. In this case, you could really use a good agent to help you with the application process and subsequent changes as proper timing is key to maximizing your benefits and avoiding any gaps in coverage, not to mention a potential nightmare of governmental proportions if you do things incorrectly.

Dropping COBRA?

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Question: My wife's company is going to pay the COBRA premium for six months as part of termination agreement which is very expensive. Can I apply for individual coverage once they stop making our COBRA payments?

Answer: You would not be eligible for a Special Enrollment Period simply because your employer stops paying your COBRA premium. However, you can apply for individual coverage either through Covered California or directly with an insurance carrier during open enrollment starting November 1, 2015 through January 30, 2016. As luck would have it, you should be able to take advantage of the former employer's largess for most, if not all of the 6 months before open enrollment closes.

Question: My husband recently changed jobs, and his new employer states that if my employer offers a group plan and I am eligible than I can not be on his plan, because of a “life change” I can enroll in my company’s plan but he and the kids can be on his plan….is this actually legal?

Answer: Yes.

Who is Pays First?

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Question: Who is primary when there is adult dependent on both parents policy and parents are divorced?

Answer: Coordination of Benefit Rules were codified by the National Association of Insurance Commissioner in 1986 and each state uses this model with some modifications. The rules cover how the primary payer is determined when an insured employee or dependent has double coverage. To determine who pays first on dependent children’s claims, the plan covering the parent whose birthday is earlier in the calendar year is primary.

Opt out of coverage

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Question: I have an employee in Pennsylvania that is recently divorced and was covered under his spouse’s policy. He is currently uninsured and wants to choose the “opt out incentive” and remain uninsured. Are there any legal consequences to this or does he have to accept the coverage since he is uninsured? Answer: If you have elected to pay 100% of the cost-sharing for existing employees he cannot opt out. Otherwise, he can.

Question: My employer just distributed a new copy of the “Summary Plan Description” that says our Cafeteria Plan contributions are limited to $2,500 per year. It used to be higher. They say it’s Obamacare. True?

Answer: Under the ACA, employee contributions to health care flexible spending accounts or Cafeteria Plans will be reduced to $2,500 per year for any plan year starting in 2013. The Plan Year is the 12-month period specified in your Summary Plan Description (SPD) that determines the beginning and ending dates of plan contributions. The plan year should not be confused with the “Claim Period” which is the period specified in the SPD of at least 12 months that determines the beginning and ending dates of expenses eligible for reimbursement. In other words, it is the period of time that claims can be incurred and reimbursed from current plan contributions. The beginning date always coincides with the beginning of the plan year, but the end date may not.

Question: My husband was updating his medical insurance papers at work & the HR lady told him that if his spouses employer offered health insurance I had to take it. Is this true? Ive always had coverage with him. Plus if I get my employers I have to pay half which would be 200-300 per month. She told him if he put on his paperwork that my employer did not offer it that it was a felony.. Can i thank Obama for this?

Answer: No, this is not part of Obamacare. Yes, an employer can force its employees to accept the health coverage offered by their employer even if that means more out-of -pocket costs for the employee. Employers can make it a condition of employment if they so choose. There is no law governing this practice, It is similar to a company policy requiring that employees have (and pay for) uniforms.

Question: As a small group health plan in PA (less than 20 employees), employees/dependents age 65 over increase my premiums substantially. Because of my group’s size, is it legal to offer incentives to entice them to go off the group plan and onto Medicare at age 65…or simply not offer coverage to those actively at work age 65+ since they have other options and the younger employees don’t.

Answer: This one comes up often so I’m going to quote chapter and verse:

“Medicare beneficiaries are free to reject employer plan coverage, in which case they retain Medicare as their primary coverage. When Medicare is primary payer, employers cannot offer such employees or their spouse’s secondary coverage for items and services covered by Medicare. Employers may not sponsor or contribute to individual Medigap or Medicare supplement policies for beneficiaries who have or whose spouse has current employment status.” (Excerpt from CMS Medicare Secondary Payer Manual, Chapter 1, (Rev 34,09-07-05)).

If an employer offers a Medicare beneficiary an incentive, financial or otherwise, not to enroll in the group, the health plan is subject to a civil money penalty of up to $5,000 for each violation. In addition, an excise tax could be applied that would equal 25% of the plan’s expenses incurred during the calendar year. This applies to all groups -large and small.

Working Spouse Rule

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Question: I am on my husbands insurance but have just gotten a job. My husbands insurance has a working spouse rule but his insurance is less expensive for the two of us than if we each get ours separate. Can they really cancel both of us if they find out that I’ve been offered insurance and how can they find out?

Answer: Your husband’s job could be in jeopardy in addition to loosing his insurance coverage, if you lie about not having access to health insurance from your own employer. While you are thinking about gaming the system, think about millions Americans can’t get health insurance at any price. Not your fault. Just saying.

Question: I work part time for a very small company and may have an opportunity to be full time. I don’t need health insurance as I have it through my husband. My employer has less than 10 employees and does not offer health insurance. My question is are they required by law to provide me insurance? As I said I don’t need it and I think if they do have to it will cause them to give me less hours as they can’t afford to pay health ins.

Answer: No. There is no law that requires an employer to provide any portion of the health insurance costs for it’s employees. In 2014, when the ACA is fully effective, larger employers will pay a tax for not providing affordable health insurance for its employees, small employers (less than 50 employees) will not be required to provide health insurance even then.

Question: My husband and I were enrolled in his former company’s group insurance plan and when he left the company 3 months ago we decided to go with Cobra instead of enrolling under my company’s group insurance plan because of a medical treatment that they provide coverage for that we need, that my company’s insurance plan does not cover. My question is I don’t know how long we can afford to pay the high Cobra premium. We pay 100% out of pocket for the premium, no government subsidy. In the event we lose Cobra because we can’t afford to pay the premium, will it be considered a qualifying event for us to enroll under my company’s group insurance plan? Thank you.

Answer: No. Unaffordable coverage is not a qualifying event. So you’ll have to wait until your employer’s open enrollment period to sign up.

Employer won't let me opt out?

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Question: My wife and I are both have group health insurance plans through our respective employers. I would like to drop my own coverage and be added to hers, however my employer is refusing to allow me to waive coverage unless “I am the primary subscriber, not a dependent, in an employer-sponsored group medical plan or retirement medical plan.” Is this legal? Why would they want to force me to maintain my insurance with them anyway?

Answer: I don’t know if this practice is actually “legal” in your state or not, but it really does’t matter. If there’s a law against it, it’s not being enforced. The insurance companies created this guideline (let’s call it the “Primary Employer Rule”) to even the playing field among employers and avoid disputes like this. This guideline may seem arbitrary, but If all employers follow the standards there will be fewer misunderstandings. In this case, the *Primary Employer Rule *does not benefit your employer because they would save money if you left their health plan for your spouse’s plan, but it all works out in the long run.

Qualifying Event Or Not?

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Question: I’ve viewed your list of qualifying events but still have a question. I have a group plan at my work that covers my family, but I pay a large premium for it. My wife recently landed a new job where she has no-premium coverage for the entire family. This is item 3 on your list. My employer is refusing to let me drop my family coverage because it is outside of the open enrollment period. So, the question is…are all of the listed qualifying events compelled by law? I’m in California. Thanks.

Answer: Your employer could be proven wrong by the right HR lawyer, but it may cost you your job. I would suggest you weigh your job against the cost of waiting for your company’s open enrollment period to opt your family out of your employer’s plan. This creates a qualifying event for your wife and kids and she can enroll in her employer’s plan at that time.

Qualifying Event Timing?

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Question: I’m the primary carrier (insured). And we will be losing our current family insurance coverage in December. My wife’s open enrollment is October and one of our family members has a preexisting condition and we don’t mind paying both premiums for the 2 months….so is it better to wait for our current insurance coverage to stop in December and add onto my wife’s insurance then as a “qualifying event”? or should we just add onto my wife’s insurance in October and carry both insurances until we lose our coverage in December?

Answer: There is no need to pay for two health plans. Wait until your group health coverage expires in December and apply for coverage on your wife’s group plan to be effective January 1, 2013. You are correct: your loss of group coverage is a qualifying event.

Defined Contribution Cost-Sharing

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Question: I have an employee in another state than the rest of us. His insurance premium is going to be over $28k a year vs. $13K for and in state family. I don’t want to miss out on this policy since it is very good the the in state employees, but I can’t afford the $28K for one person. Is there a way I can “pass on” more of the premium to this one person, without charging more for the in state employees?

Answer: The simplest solution to this problem is to use a defined contribution method of cost-sharing with your employees. For example, you establish a dollar amount that you are willing to contribute towards the family premium - let’s say $1000 per month. The out-of-state employee will have to make up the difference. You should allow them the option of opting out of the group plan and purchasing an individual health insurance policy and still get the defined contribution.

Drop Individual Coverage for Group?

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Question: Is it a good idea to drop your individual health insurance for a group plan if you have a pre-existing condition?

Answer: I don’t know the particulars of your situation, but I’m going out on a limb and say, “No. Don’t drop your individual health insurance now.” Why? Because you could loose your group health insurance if you’re laid off later. Your individual coverage is permanent as long as you pay your premium.

Employee Wants Dependent Coverage

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Question: My father and i work for the same company and same corporation, i currently am 22 years of age.i should be able to stay on my fathers plan untill im 22 years of age but because we work for the same company they are denieng me to stay on his policy and making me pay for my own medical insurance. which doesnt make since because he has to pay the same amount whether im on it or not, basically my question is do they have the right to deny me benifits provided by my father as i being 22. because we work for the same company.

Answer: The Affordable Care Act (ACA) (Obamacare) extended dependent health insurance coverage to age 26. Since September 23, 2010, insurance companies nationwide have had to comply with this aspect of the law. However, employers are free to define their employment contract with their employees. They can make it a condition of employment that workers and their dependents choose to be insured by their own employers if available. So yes, your employer has the legal right to do just that. While your out-of-pocket costs may be higher, you are not being denied coverage.

Question: I am about to retire and have secured independent coverage beginning 2 months before my actual retirement date. Can my company insurance carrier require me to stay on my plan until my retirement date or can I drop their coverage now?

Answer: In order to drop your group health insurance before the end of the plan year (open enrollment period), there has to be a qualifying event. For example, your retirement is a qualifying event. So you cannot drop your group health insurance coverage before your retirement date. Your mistake was in setting the effective date of your individual health insurance plan two months early. You can probably change that, ask your individual plan carrier to put off your effective date. If you show that you have coverage until then, there should be no problem.

Sign Waiver or Not?

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Question: My employer’s insurance agent is asking me to sign a form saying I deny insurance. I am opposed to signing this because I am not offered insurance since I am considered part-time (16 hrs/week). If I am not offered something, how can I deny it? What would be the reason for the insurance agent wanting the part-time employees to sign this? Couldn’t it potentially hurt me in the long run? In my opinion, I am being asked to lie on the form. Please advise.

Answer: If you are ineligible for your employer-sponsored health insurance coverage because you don’t work enough hours, there is no need to sign a waiver. Your employer’s contract with the insurance company - if self-insured their ERISA plan document - defines who is eligible for coverage. If you refuse to sign a waiver because it’s a matter of conscience for you, I don’t see how that could hurt you.

Question: I am currently covered by my husband’s employers’ plan. I started being covered by it because I was unemployed. Now I will start a new job in September with a company that offers group insurance option. Because of an ongoing medical treatment with the current healthcare provider ( husband’s employers’) I would prefer to stay insured with my husband’s plan. Can my husband’s employer deny me continuing this service? They don’t state it clearly in their policy but they do state that they need to be informed within 15 days of me becoming eligible for another group insurance so I just assume that they will not want to keep me. Is there something I can do about it or is it just perfectly ok because it’s a particular company’s policy?

Answer: There is no federal or state law, regulation or guideline that prevents you from waiving your employer’s group health insurance coverage in favor of remaining covered as a dependent on your spouse’s insurance. When you complete the waiver form, you will indicate that you are covered on your spouse’s plan. This should not be a problem for your employer as they will not have to make a contribution toward your health insurance. Please note: you will not be eligible for your employers health plan until the next open enrollment period unless you have a qualifying event before that time.

Pregnant with New insurance

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Question: My husband lost his job in May. We lost insurance the last day of May. He will now begin a new job next week. Im not exactly sure when we be able to start our insurance with them. My question is that I recently found out I am 5/6 week pregnant. Will I get denied coverage? For example if we can not begin to use the insurance until October? will my pregnancy then be considered a pre-exisiting condition. The insurance the company provides is a group insurance.

Answer: Whenever your group health insurance coverage starts, medical expenses connected with your pregnancy will be covered from that point on.

Question: Is it legal for my boss to pay more fro some employees’ health insurance and less for others?

Answer: Yes! An employer can give employees different contributions based on classes of employees. To comply with federal regulations, employee classes within the health plan must be based on bona-fide business differences. These may include job categories, geographic location, part-time or full-time status, date of hire, etc. Within each class, the employer must treat all “similarly situated” employees equally. By creating classes based on genuine job categories, all employees within a class will be “similarly situated”. Employers must not discriminate against unhealthy people. An employer cannot provide inferior benefits to specific individuals with adverse health conditions. Employers must spell out the requirements for classes and benefits in the ERISA plan document.

Can my Employer Do That?

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Question: While I am in the 3-month waiting period for group health coverage with my new employer, my husband decided to add me to his health plan because he didn’t want me to be without insurance for 3 months. His employer contributes toward the plan for him, leaving him responsible for only paying $28 a week for his own coverage. They allowed him to add me, but do not contribute to my cost at all, so he pays $75 a week out of pocket. I just submitted the forms to sign up for insurance with my own company, which should go into effect Sept 1. However, my benefits administrator called me today and told me I was not eligible to enroll myself for coverage since my husband’s employer insures me. I told her that they technically don’t insure me, they don’t pay toward my premium at all. She said it doesn’t matter, and that my employer will not cover me. This seems COMPLETELY wrong to me. How can they deny me coverage in a group that I qualify for??? This woman is relatively new in her position, and I think she’s mistaken. I could understand denying me if my husband’s employer was paying for my coverage, but they’re not. What should I do?

Answer: Not complaining, but I get this question very often. You are correct. Your employer can’t do that, I have only seen this in some funky self-funded union plans because they draft their own plan documents. However not for the majority of employers. Without knowing anything else other than what you wrote, you should insist on your right to be covered on you new employer’s health plan. If you haven’t already done so, your application should indicate that your coverage under your husband’s plan is ending September 1st. Once you are approved, cancel your coverage under your husband’s plan.

Question: I’m a union employee with health coverage at a minimal cost. My wife has health insurance thru her employer but pays approximately 50 percent of the premium. We also have two children and my wife has them on her policy. We’re thinking of saving money by adding everybody to my policy and dropping her insurance. I’m wondering if my insurance will say that her employer offers a policy even though we’re paying high premiums that her policy is primary coverage for the family. I would love to drop her policy and add the whole family to my policy. I would appreciate any feed back…Thank you, James.

Answer: James, your insurance company cannot refuse to cover your wife and kids as dependents on your group health insurance plan because your wife has access to coverage with her employer. However, your union may have their own rules or regulations that you need to inquire about.

Two Group Policies?

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Question: Hi my wife is 24 and is still on her mom’s group coverage through work, I recently graduated grad school and now have group coverage through my place of employment. I am wondering if we can use both group coverage plans as a primary/secondary for the operation, or is her mom’s group coverage not valid now that she is on mine?

Answer: The benefit of double coverage is limited. The secondary plan will only pay for the difference in coverage for a given medical expense where the primary plan’s coverage is not as good. For example, say the primary plan has a $500 copay for the in-hospital benefit and the secondary plan has a $250 copay for the same benefit. You would get an additional reimbursement of $250 from the secondary coverage. If the primary plan’s benefits are as good or better than the secondary plan, there is no real benefit in having double coverage.

Question: I had health insurance coverage on my son when I was working for 2 years. In March I resigned from my job… filled out paperwork (to be added to father’s group coverage) on 6/30. The HR Department said that he will not be added to the insurance until the 1st of the year. Everyone is telling me that he should qualify for “special elections” and there is no time limit on that. Is this true? I think the employer is trying to say we waited too long to add him to his dad’s insurance.

Answer: Yes, apparently you did wait too long. You may enroll a dependent during the period beginning 31 days before and ending 60 days after a qualifying event. That would make May 31 the deadline adding to his father’s plan

Change in Coverage

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Question: I was scheduled to have gastric bypass surgery July 31. My surgeon’s office contacted me and told me coverage was denied. My employer will add the coverage effective Sept 1, only if they do not have to cover every employee (we total under 10). Does my employer have to cover every employee or can she just cover me since no one else is obese?

Answer: While it was generous of your employer to offer the additional coverage for bariatric surgery for you, the coverage change would have to be added to the entire group.

Question: I am 21 years old and on my parent’s insurance. I just got a job that offers insurance but it is not as good as my parents. Can I deny my employer’s insurance and just stay on my parents?

Answer: Yes. You may sign a WAIVER OF GROUP HEALTH INSURANCE COVERAGE. The waiver says something like this, “I hereby certify that I have been given the opportunity to participate in the group health insurance plan provided by my employer through XYZ Insurance Company and have been informed of the consequences of not enrolling in such plan at this time. I understand that if I reject the group health plan on behalf of myself and/or my spouse or other eligible dependents, the group health plan will not provide any benefits on behalf of those individuals for whom I have waived coverage. With this knowledge, I decline to enroll.” You will usually be asked to list your current coverage.

Newborn Coverage Options

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Question: I am married but am still covered under my mothers group insurance plan. I have maternity coverage but I am wondering if the insurance will cover the baby after birth and for how long. Also if my husband does not currently have medical insurance will his employer still have to open his enrollment after the baby is born?

Answer: Generally, your insurance coverage will cover your newborn for the first 30 days after birth, but please confirm that with your insurer to make sure. Your husband apparently waived employer-sponsored group health insurance and will not be able to enroll until the his employer’s next open enrollment period. The baby’s birth is not a “qualifying event” for your husband. It would be a qualifying event for the child were your husband insured. You can purchase an individual health insurance plan for your baby in the meantime.

Question: My nineteen year old son just graduated from high school in May and will be attending college full time in August. He has a part time job at Burger King working about thirty-two hours a week. Burger King offers insurance to it’s part-time workers but it costs more than he makes. My employer is kicking him off my insurance because he “has health insurance available through his employer.” He either has to quit his part-time job or go without health insurance until august. Is this legal? They state that this is Obama Care.

Answer: Your employer has no legal grounds for denying your dependent son coverage under your group health insurance plan - certainly not any part of “Obamacare”. But keep in mind that your employer can insist on a “company policy” that has no legal basis. That’s his prerogative. You may be legally right and loose your job.

Qualifying Events List

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Question: If a dependent loses coverge on their parents policy due to reaching the maximum age, is that a qualifying event to pick up coverage under their own employer?

Answer: Yes. See #4

List of Qualifying Events

  1. Change in legal marital status, including marriage, death of a spouse, divorce, legal separation and annulment.
  2. A change in the number of dependents, including birth, death, adoption, and placement for adoption.
  3. A change in employment status of the employee, or the employee’s or retiree’s spouse or dependent, including termination or commencement of employment, a strike or lockout, a commencement of or return from an unpaid leave of absence, a change in worksite, and a change in working conditions (including changing between part‐time and full‐time or hourly and salary) of the employee, the employee’s or retiree’s spouse or dependent which results in a change in benefits they receive under a cafeteria plan or health or dental plan.
  4. A dependent ceasing to satisfy eligibility requirements for coverage due to attainment of age, student status, marital status, or other similar circumstances.
  5. A change in place of residence of the employee, retiree or their spouse or dependent and the current carrier is not available.
  6. Significant cost or coverage changes (including coverage curtailment and the addition of a benefit package).
  7. Family Medical Leave Act (FMLA) leave.
  8. Judgments, decrees or orders.
  9. A change in coverage of a spouse or dependent under another employer’s plan.
  10. Open enrollment under the plan of another employer.
  11. Health Insurance Portability and Accountability Act (HIPPA) special enrollment rights for new dependents and in the case of loss of other insurance coverage.
  12. A COBRA‐qualifying event.
  13. Loss of coverage under the group health plan of a governmental or educational institution (a state’s children’s health insurance program, medical care program of an Indian tribal government, state health benefits risk pool, or foreign government group health plan).
  14. Entitlement to Medicare or Medicaid.
  15. Any other situations in which the group health or dental plan is required by the applicable federal or state law to allow a change in coverage.

Question: My employer has told me that he is changing to a defined contribution plan in July. He said that my healthcare it will cost me the same as it did this year but that I will have more choice of plans. Is it a good deal for me or am I getting screwed?

Answer: Compared to the old “defined benefit” plan where employers determined a set of health-insurance benefits, under “defined contribution” plans employers pay a fixed amount for each employee, and employees use the money to buy or help pay for insurance they choose themselves. It’s a good deal for employees in the sense that it puts you in the driver’s seat as far as selecting the plan you want, but if the defined contribution amount doesn’t go up to match the inevitable premium increases for health insurance, it will leave the employee holding the bag for more and more of the costs. It’s a better deal for employers because it puts them in control of their health benefit outlay regardless of health plan rate increases.

Health-Care Reform will push the transition to defined-contribution health insurance in 2014. If most employers do retain their health plans, the state health insurance exchanges created under the law will make the basic idea of a defined-contribution health plan more prevalent, and thus may speed its adoption. If defined-contribution plans that are sufficiently generous count as employer-based coverage — as is generally expected — the trend toward such plans will probably accelerate.

*Question: *My sister is fortunate to work for a company that offers several medical plans to choose from. She was thinking of switching plans at the next open enrollment time but she has been diagnosed with fybroid tumors. At this point they are large enough that medical would cover her for the removal but not critical enough that she has to have them out this very minute. If she waits and changes medical plans during open enrollment time at her company could the new plan refuse to cover the surgery claiming a preexisting condition?

Answer: If as you say the new health plan is a group health plan that has been offered as an option by your sister’s employer, then once enrolled in the new health plan any preexisting condition will be covered. In most states there would be no waiting period either, but just to be safe your sister should check with the new plan to make see if there is a waiting period for any specific conditions.

Question: As an employer with 25 employees, do I have to equally contribute towards health insurance premiums for my employees. Currently I pay for single coverage for all employees. I have some very valuable employees that have been here for over 20 years and I would like to give them employee/spouse coverage without a cost to the employee.

Answer: You may vary your employer contribution to the employees’ premium under your company’s group health plan in several ways. You can contribute different amounts (1) for different classes of employees - hourly vs salaried vs management, for example. (2) for different age groups because rates are higher for older employees, (3) for different locations if rates are higher for some because of ZIP codes, (4) for family status - those with dependents more than single employees. You will have to find another way to provide additional benefits on the basis of length of service alone.

Question: I am currently covered by the VA. My benefits will stop in 2013 due to income. I have pre-existing conditions, high blood pressure and cholesterol. My spouse checked with her employer and can get me coverage for around $650/ mo. Will this be the best and most inexpensive choice for me with my conditions?

Answer: When your VA healthcare benefits end in 2013, you probably will not have any other health insurance options than your spouse’s group plan because of your preexisting conditions. Your wife’s employer-sponsored health plan is expensive because it’s probably very comprehensive coverage and that’s why the monthly premium is so high. If you had other coverage options, you would probably choose less comprehensive coverage - a high deductible plan with potentially more out-of-pocket expenses - for a lower monthly premium.

Fortunately, you will not have to pay such a high premium for very long. Thanks to the Affordable Care Act, you will be able to purchase individual health insurance through your state health insurance exchange in January 2014 without being declined or rated-up for your preexisting conditions.

Question: I’m approaching at 65 and my employer is strongly encouraging me to cancel my group coverage and elect Medicare coverage only. Can they do that?

Answer: Yes, your employer can “strongly encourage” you to take Medicare coverage when you become eligible. It’s important that you understand that your employer has been paying at least $500 a month to provide health insurance for you. Medicare will cost $100 per month. Perhaps you could negotiate a reimbursement for the Medicare Part B premium of $100 and an additional $130 - $150 per month for a Medicare Supplement - total cost to your employer is $250 per month and you get virtually 100% coverage. This advice applies only to group health plans with less than 20 employees where Medicare is the primary payor and the group health plan is secondary.

In larger groups, Medicare is the primary payor and there are rules that forbid employers from targeting Medicare-eligible employees by providing incentives (financial or otherwise) for them to drop employer coverage in favor of Medicare. As one of our readers, Chris Anderson of Sylmar, CA, pointed out: “The Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration (HCFA), has confirmed this prohibition many times, and employers should note that CMS may assess a penalty of up to $5,000 for each violation. An employer cannot offer, subsidize, or be involved in the arrangement of a Medicare supplement policy where the law makes Medicare the secondary payer. Even if the employer does not contribute to the premium, but merely collects it and forwards it to the appropriate individual’s insurance company, the GHP policy is the primary payer to Medicare.”

Question: i am adding a person with a pre-existing medical condition on my group policy…will they be accepted?

Answer: Yes. In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). This law mandated nationwide, across-the-board guaranteed issue in the small group market - among other things. A small group is defined as an employer group with 2-50 employees. However, insurance companies may charge higher premiums for groups that contain high risks or that have had a history of high claims. In some states, the premium for high-risk groups can be much higher.

Question: Why can’t i choose to be the primary health insurance for my children if my coverage is better than my husband’s?

Answer: It’s not up to you to decide which plan is primary. When dependents are covered on both parents health insurance, Coordination of Benefits (COB) rules come into play. Most states have adopted these rules though they can vary some from state to state. In general, when deciding which parent’s health insurance coverage is primary on claims for double-covered dependents, the “birthday rule” applies. That is, the plan covering the parent whose birthday falls earlier in the year pays first, and the plan of the parent whose birthday falls later in the year is secondary. And if these parents have the same birthday, the plan covering the parent the longer period of time is primary.

Group Health Opt-Out Rules

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Question: My husband has a new job. Can I cancel my current health insurance with my company and enroll with his new health insurance plan?

Answer: Your husband’s new job is not an acceptable reason for you to opt out of your own employer-sponsored health plan. You may do that at the next open enrollment period. However, you can’t be added to your husband’s health plan until his plan’s open enrollment period unless you have a “qualifying event” like loosing your coverage through termination. These rules may seem arbitrary are in place to protect employers and insurers against adverse selection.

Qualifying Event: Loss of Coverage

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Question: My husband voluntarily left his job and was offered COBRA for both of us. I am employed by a different company and now want to apply for their health insurance, when do I qualify for coverage. Do I have to wait until the Cobra enrollment period (65 days) runs out?

Answer: Your loss of health insurance due to your husband’s termination of employment is considered a “qualifying event” which allows you to join your own employer’s group health plan on the first of the month after loss of your husband’s coverage. COBRA is an option for people who do not have another employer-sposored option as you do.

Question: My husband works for a large mechanic shop. He was offered insurance and was told that I his wife am ineligible for any plan cheaper than $500 a month. Individual plans are much cheaper than this and I find that amount preposterous and the reasoning even more absurd. The employer stated “26 is a time to have babies and thats why it is so elevated”.I have no inclination of having kids and find this frankly ridiculous. Other employee have family members covered for less and some are not covered at all and are not offered free coverage as my husband was offered (maybe due to the fact his been there 2 yrs?) Is this even legal what he is doing? Putting everyone in different groups and classifications of his morbid idealisms and basing his coverage on this?

Answer: I get a lot of these “is it legal” what my employer is doing and the answer is “yes” in most cases. So it is with your situation. First, the employer is allowed to make a greater contribution some employees’ health plan premium by classification. For example, a greater contribution to salaried workers than hourly workers, or management and non-management. Secondly, it is common for employers to make no contribution to the coverage of spouses and children. Finally, group health insurance is usually more comprehensive - includes maternity coverage for example. On average, group health insurance will cover 80% or more of your average medical expenses (actuarial value) versus 60% or less for individual health insurance. But that’s why individual health insurance can be cheaper and if you don’t need the extra coverage (maternity in your case) why pay for it. Click here to compare rates now. I think you’ll be surprised how much you can save.

Question: Does my employer have to pay part of my health insurance in California?

Answer: Yes, but only if your employer already sponsors a group health plan for its employees. If so the law says, they must pay 50% of the employees’ premium for the lowest priced plan available. If your employer does not already have a group health plan for its employees, they are not required to pay any part of your individual health insurance expense.

Question: I am in middle management for a large industrial company and pay for a family plan that covers me and my two children. My wife is a teacher whose school board provides single coverage for her (for a fee) that’s nowhere near as good as mine - she can’t opt out. My employer recently announced that effective May 1, if any of us have a spouse with health care coverage, we need to enroll our children on their plan and be covered only as “single” on our own existing plan. No explanation was given although I suspect that in my industry which is predominantly male, the company wants to save costs by not covering child delivery and other costs not directly incurred by the actual employee. Switching to my wife’s plan would be a) more expensive and b) provide less coverage than my children have now. Is this legal?

Answer: Employers increase employee cost-sharing to order to deal with the ever increasing cost of providing health care benefits for its employees. Generally, this occurs after the employer has absorbed much of the cost increases themselves. Usually this cost sharing takes the form of requiring a larger employee premium contribution or a reduction in benefits. As far as I know, your employer has the right to insist that a spouse or dependent must opt out of your coverage if they have access to coverage through their own employer. Requiring you spouse to cover your children on her employer’s health plan doesn’t seem fair. There is not yet (2014) any law that says employers have to provide health insurance at all, but if they do they must follow federal ERISA regulations that among other things govern “fairness” in the administration to the plan. For a more definitive answer, you will have to ask an HR attorney.

Double Coverage: Who Pays First?

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Question: I have an individual health insurance policy paid for by my employer. I also have the benefit of being on my husband’s health insurance through his employer. I always thought that MY coverage was primary over the coverage provided by my spouse’s employer. But my carrier said group policies are always primary over individual policies. Is this true? (South Carolina).

Answer: Coordination of Benefit Rules were codified by the National Association of Insurance Commissioner in 1986 and each state uses this model with some modifications. The rules cover how the primary payer is determined when an insured employee or dependent has double coverage. For example the rules state that the group plan covering the insured as an employee pays first. To determine who pays first on dependent children’s claims, the plan covering the parent whose birthday is earlier in the calendar year is primary.

The Coordination of Benefits endorsement on group health policies does not apply to individual health insurance policies so they generally pay their full benefits regardless of other group health policies in force. But there are variations between states, it is important that you review the provisions of your individual health insurance policy because they will sometimes include their own provisions about other insurance.

Employer Will Not Let Me Opt Out

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Question: My company pays for half of my premium and I pay the other half along with full coverage for my three year old daughter...the deduction for my health insurance had increased...I told my employer that I would like to opt out of the company policy and purchase individual insurance, because I could get a better policy at a cheaper rate and they advised me that I cannot cancel my insurance until open enrollment in November. I was never advised that my premiums were increasing, there was not a meeting, email, nothing letting me know. Can my employer force me to stay on their company plan until November?

Answer: Yes. Apparently your employer did a lousy job of communicating the increase in your health insurance contribution back in November when you could have opted out. Employees should have the option to decline medical coverage or to purchase individual health insurance as long as their decision does not affect the medical rates of those remaining in the plan. Opt-Out provision are restricted to open-enrollment periods because it was determined that about 20 percent of a plan's participants generate 80 percent of the claimed costs in any given year. In most cases, those who opt out of a medical plan are the healthier population; employees expecting high expenses prefer the extra coverage. Since employees with more medical needs tend to stay in the plan, when employees opt out there are fewer premium dollars coming into the plan, but claim and administrative costs do not go down in the same proportion. This results in higher premiums for those remaining in the plan. That's why restrictions are in place for right to opt out.

Double Coverage Quandry

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Question: My employer offers health insurance to me at no cost to me. My husband also has me covered through his insurance at his place of employment. I have been told that my insurance through my employer has to be my primary. I want to opt out of my insurance through my employer and only have my husband insurance, but my employer is telling me that I can not opt out and that I have to take the insurance. Is this right? The board pays our insurance, but I would rather them put my board paid money into and annuity.

Answer: The responsible thing to do would be to take the coverage your employer is offering and cancel the coverage being offered through your husband’s employer. Your sense of entitlement is especially astonishing at a time when many people lack good health care and some can’t get it at all.

Question: My employer has just sent me an email stating he will no longer cover the insurance premium for my spouse and my cost for myself will increase. He states this is effective in March. Is this legal? This is a small Colorado employer.

Answer: Yes. Your employer was never required to cover your spouse and did so voluntarily. If an employer offers a group health plan, he or she is required to be fair. For example, it the employer offers coverage for spouse or other dependents, he or she must offer like coverage to all employees of that class, e.g. hourly, salaried, management, etc..

From what you say, your employer is making a choice to no longer contribute to dependent coverage for all enrolled employees effective on the March 1 plan renewal date. That is his right and probably a necessity for the health of the business. Employer sponsored health insurance costs have increased by 50% over the last 5 or 6 years.

Question: I am turning 65 and work half-time. I am not eligible for health benefits, so I am on my wife’s policy. It is at a state university and it is through Anthem. Will I be able to continue on her policy, or will Anthem kick me out?

Answer: When you turn 65 you have health insurance available. It’s called Medicare. Your wife’s employer is no longer obliged to offer you coverage as a dependent on her employer-sponsored policy. Medicare is excellent coverage and it’s available to you for less than $100 per month. Anthem will not “kick you out” because they collect a nice piece of change from your wife’s employer as long as you remain on the group plan. Do the right thing and opt for Medicare.

Preganant With 2 Choices

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Question: I am 9 weeks pregnant and recently qualified for PCIP (for people with pre existing conditions without insurance 6 months). It is ONLY maternity coverage. Coming up in February, I am eligible for my work health insurance to kick in. I am confused. Can I keep my maternity with PCIP and enroll in work (anthem blue cross for Dental, vision, and medical come February? I am concerned because before applying for PCIP, I turned to anthem and they denied me because it was a pre-existing condition. Can I have both insurances? Please help. Thank you.

Answer: You are very fortunate to be pregnant and have 2 options for coverage. Let me start by saying that you can’t have both PCIP and employer-sponsored group health insurance. You need not be concerned about selecting the employer-based coverage with Anthem Blue Cross as you cannot be declined due to preexisting conditions with group health insurance as you were when applying for individual health insurance.

Question: My wife lost her job and the medical insurance was through her employer. My job offers it but they are making me wait 6 months in my new position before I can sign up. Is that legal in Minnesota? Thank you, Jason.

Answer: Yes. Employers can set the new-hire waiting period up to 6 months before becoming eligible for the company’s health plan. Suggest you take your COBRA health insurance option for 6 months until you are covered under your employer-sponsored group plan.

Question: Do California employers have to provide health insurance to their employees?

Answer: The is currently no requirement for California employers to provide health insurance for their employees. Health care reform places no requirement on small business employers (less than 50 employees) to provide employer-sponsored health insurance in 2014 and beyond.

The Affordable Care Act (ACA) mandates that larger employers (50 or more employees) provide health insurance starting in 2014 or pay a penalties called the play-or-pay tax. The play-or-pay tax is one of the most significant tax consequences of health care reform. The tax will take effect in 2014, and it will have a significant impact on large employers subject to it. Both applicable large employers that offer coverage, and those who do not offer coverage to their employees will be subject to this tax. Employers will face another big decision due to this tax. Their question will be, “Should we offer healthcare coverage to our employees at all, or just simply pay the applicable tax?”

Question: I have insurance through my job. My kids are under my husband’s job insurance. I just received information that my job’s insurance is going to change the plan … It is way too expensive for just one person. My question is, do you think that my husband’s insurance would insure me?

Answer: Your husband’s employer has the option of not adding you on your spouse’s coverage if you have coverage offered by your own employer. You should ask your husband to inquire with his employer if you can be added. If so, you may have to wait until his next open enrollment period.

Question: What is the minimum employer contribution per employee for group health plans in California?

Answer Employers must pay at lease 50% of employees’ premium for lowest cost plan offered by the plan’s carrier(s). There is no requirement for the employer to make any contribution to the employees’ dependents.

Question: Our company health insurance is only offered as high deductible, What can i do with costs that I can’t afford?

Answer: Your dilemma is very common nowadays. On the one hand, your employer is probably doing the best he or she can by providing health insurance coverage of any kind. On the other hand, you, the employee do not perceive it as much of a benefit because the high deductible means high out-of-pocket expenses for covered medical expenses. Expenses your are afraid that you cannot afford.

It’s understandable that you feel like you are not getting much of a benefit, but here’s are couple things to remember: First, high-deductible health insurance is a whole lot better than no insurance at all. Even though you may never reach your deductible amount, you still get a big discount on covered medical expenses within your network, in some cases the negotiated amount that your end up paying is less that half the original billed amount. Secondly, if you were to have a catastrophic medical expense, say $50,000, the maximum out-of-pocket amount on your policy, probably no more that $10,000, would at least set a limit on what you owe that you could reasonably expect to pay off over time. So that high deductible insurance could make the difference between having to file for bankruptcy or not.

Question: What are the tax implication if my employer offers a health insurance plan and I decided to delcine and purchase my own? They do not offer an FSA.

Answer: If you opt out of your employer's group health plan in favor of your own personal health insurance plan, your health insurance premiums will be lumped together with your medical expenses and listed on your federal 1040 form as itemized deductions. You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. Usually, only people with unusually high expenses and low income will find premiums to be tax-deductible.

I understand, that many employers are reacting to ever increasing group health insurance costs by asking employees to make greater contributions to the premium. Even though your share of the premium is a lot more than it used to be, it's usually a better deal to take the group coverage than to purchase personal health insurance. That's because state laws require the employer to pay a substantial percentage of the premium - usually at least 50% - for each employee. So even though you can find individual health insurance plans at lower premiums, they don't cover as much. The average group health plan has an actuarial value of 80% or more. That means the plan will cover 80% 0f the typical medical costs. Individual plans can have an actuarial value as low as 55%. Dependents are a different matter. Employers are not required to pay anything toward coverage of an employee's dependents and smaller employers typically do not.

So, bottom line, take another look at the employer sponsored health plan for yourself, but shop for personal coverage for your spouse and kids. Families do not all have to be on the same plan.

Group Dependent Coverage Costs More

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Question: If I am covered by group heath insurance, should I pay more for my wife?

Answer: Yes. In employer-sponsored group health plans, employees pay more to cover their spouse or children than they do for themselves. There are 2 reasons for that. First, the insurance companies set dependent rates higher than employee rates. Secondly, employers must pay a substantial portion of the employees’ premium (varies by state), but no such requirements exist for dependent premiums.

If your spouse can qualify for individual health insurance, you’ll probably find that you can insure her at less cost outside the group. Get a quote now.

HRA Pros and Cons

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Question: My broker has presented an HRA option that will save me quite a lot of money on my company's group health benefits next year. Is it worth the change? What are the pitfalls?

Answer: The advantages are great and the disadvantages small. However, I will caution you that communicating the benefits to your employees is perhaps the most important step in making an HRA strategy pay off for your company. Here's a list of pros and cons:

Advantages of HRAs for employers include:

Reimbursements of qualified claims are tax-deductible for the employer.

Employers know their maximum expense related to their health care benefit.

Advantages of HRAs for employees include:

Contributions that employers make can be excluded from employees' gross income.

Reimbursements may be tax free if the employee pays qualified medical expenses.

Unused funds in the HRA can be rolled into future years for reimbursement.

HRAs may be offered in conjunction with other employer-provided health benefits including Flexible Spending Accounts (FSAs).

Employees do not have to be covered under any other health care plan to participate, unlike (for example) a Health Savings Account (HSA) which requires a High Deductible Health Plan.

Employees can be reimbursed for a health care plan that meets their or their families' specific needs, as opposed to a standard company plan.

Disadvantages of HRAs

HRAs must follow "a variety of statutory rules and provisions" including the COBRA continuation coverage requirements, ERISA, and HIPAA.

HRA plans are considered "Primary Payers" subject to Medicare Secondary Payer (MSP) mandatory reporting requirements.

Self-employed persons are ineligible.

Highly compensated participants may be subject to certain limitations.

Question: A number of years ago, we had a layoff from my long time employer; only one of the senior staff remained. That person has an autistic child. Recently, I have been told that he could not be terminated because he had an uninsurable dependent. Is that true?

Health Insurance Portability

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Question: Can i continue to have the same insurance plan ,even if i change the employer?

Group vs Individual Coverage

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Question: My wife and I run a small business selling greetings cards. A friend told me that a small group policy is totally the better way to go and that his insurance covers everyting. Would it be a good thing for us my wife is 52 and doesn't smoke. I'm 55 and smoke about a pack a day.

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