Employees Deny Employer’s Health Insurance
Employees have the convenience of utilizing their employer’s health insurance policy. This coverage could save them and their families money on their healthcare. However, during events, including annual open enrollment periods or “a family status change,” such as marriage, divorce, and birth, workers can choose to deny their boss’ policies for new ones (Blakely-Gray 2017). Employers can permit their decision, but they should be aware of certain laws.
Before employees drop their employers’ health insurance plans, they should consider a variety of factors. Although they can deny their employer’s health insurance policy, the Affordable Care Act’s individual shared responsibility provision requires them to have health insurance plan or “get an exemption,” but, if they do not have any policy, the IRS would fine them (Fifield). Otherwise, employees can deny their employer’s insurance if they receive coverage from another source, such as their parent’s policy, depending on whether they are under 26, or their spouse’s policy (Cecil 2016). In addition, they could be enrolled into their own policy already (Cecil 2016). Employees may also find cheaper policies from the state or federal marketplaces, but they still need to check their premiums and deductibles as lower premiums may correlate with higher deductibles “and vice versa” (Cecil 2016). They also need to compare policies with their employer’s policy, checking whether either of them covers treatments and prescriptions for conditions they or their family member has (Cecil 2016; Johnson 2009). They also need to check whether their “preferred doctors” and hospitals accept their new policies (Cecil 2016). In the event that an employee needs to return to their employer’s health insurance, such as “[change] of spouse or parent’s employment benefits” or “[death] of a dependent or spouse,” they “would have to check with [their] plan administrator” since “[every] health insurance policy s [sic] different…” (Araujo 2018).
When employees deny their employer’s insurance, employers need to comply with regulations. When the open enrollment period is occurring, employers must always allow every worker to choose whether to enroll into their policies (Fifield). Otherwise, employees that turn to HealthCare.gov for health plans and successfully get “a premium subsidy on their taxes” may cause employers to go through an audit, “but if [they’re] a company with 50 or more FTEs [full-time equivalent employees], it will unlock a penalty” (Fifield). Large employers could also avoid these penalties so long as their health plans cover “at least 60% of an employee’s healthcare expenses” and the premiums do not “exceed 9.5% of the employee’s W-2 compensation” (Peasall 2014). They should have workers sign a waiver of coverage, which shows that while they offered their health plan to their workers, the workers denied it, thereby avoiding a penalty from the IRS (McKitrick 2015).
Employees need to consider many aspects of their lives before denying their employer’s health benefits. Meanwhile, employers need to document their health plans and employees’ decisions for the IRS.