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When can my employer cancel my health insurance?

Keep in mind...
  • Some Employers are Exempt from Sending Notices of Insurance Cancellations
  • Health Insurance Cancellation Can be Effective as Soon as Your Last Day of Employment
  • Employees Should Receive COBRA Information from Ex-Employers

When can my employer cancel my insurance?

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Whether your hours have changed at work or your thinking about quitting, you may be wondering when your employer can cancel your health insurance? There are many instances when a health insurance policy can be canceled, but it’s important to understand when this can happen and why.

Below, we’ll go over many instances where an employer can cancel health insurance coverage justly. It’s also important to understand your responsibilities surrounding your coverage.

If you need to find your own private health insurance, enter your zip above and we’ll give you a list of your state’s top-rated providers for free!

Who’s exempt from issuing insurance cancellation notices to employees?

If your health insurance is going to be canceled, your employer is required to provide you with a notice of cancellation. However, this obligation does not apply to all employers.

Some employers who do not have to provide employees with an insurance cancellation include:

  • Churches
  • Certain government employees
  • Employers with foreign insurance plans

When can health insurance be canceled after you quit?

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There’s no “one size fits all” answer as to when your health insurance can be canceled after you quit your job. The last day your employer-based health insurance coverage is effective depends greatly on your last day of employment.

For some, the coverage will continue through the end of the month. Others employee policies can be canceled on a person’s last day of employment.

If you are preparing to quit your job and are worried about when your health insurance will end, it’s a good idea to contact your company’s benefits administrator.

The administrator will be able to provide you with the exact date your insurance coverage will end. When you quit, are fired, or are laid off by your employer, you will be provided with a packet telling you how to apply for COBRA coverage.

Can an employer cancel your insurance when you’re out with an injury?

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It’s your worst nightmare, you’re out with an injury and you’re afraid your employer-based health insurance will be canceled? Can it happen? First things first, if this happens to you, you need to file for temporary disability under the Family and Medical Leave Act.

Federal Law allows you remain home from your job or work with significantly reduced job duties for a certain amount of time without jeopardizing your employment status.

You can apply for FMLA benefits whether you are injured on or off the job. If you file for FMLA, when you are well enough you will be allowed to return to your former position. Whether your injury qualifies for FMLA benefits is based on paperwork obtained by you from your physician.

Under most circumstances, FMLA also protects your health insurance benefits until you’re ready to return to work. If you are covered by FMLA, your employer cannot cancel your health insurance. Injuries or events that may qualify you for FMLA benefits include:

  • Sudden Injury
  • Illness
  • Disability
  • Serious Situations

Can employers cancel benefits due to financial burden?

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Another worry that some employees have is that their employer will cancel their insurance if their health issues have become a financial burden. However, an employer can’t cancel an employee’s benefits simply because their medical care is expensive.

The same goes if you’ve become disabled. The Affordable Care Act prohibits an employer’s insurance provider from canceling a person’s health insurance just because they’ve developed a disability.

Can health insurance be canceled retroactively?

Yes, but it’s rather difficult. Health insurance can be canceled retroactively, but your employer and the insurance provider would have to have a pretty solid case of fraud or misrepresentation against you.

Rescission of coverage, that’s what retroactive cancellation is called in the Affordable Care Act, is strictly prohibited. However, if it can be proved that the insured performed an “act, or omission that constitutes fraud” or if a misrepresentation of material facts was intentionally submitted, a policy can be canceled retroactively.

How much notice must employers give before canceling insurance policies?

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If an employer is going to cancel health insurance, they must provide employees with a 30-day notice. If there are going to be material benefit changes, the employer must provide a 60-day notice.

If your employer cancels your health insurance, it will trigger a special event enrollment window. During this time period, an employee can apply for Marketplace insurance to ensure they have health insurance before the cancellation is effective.

Understanding when or how your insurance can be canceled allows you to be prepared for the future. If you are given a timeframe before your insurance cancels, it’s important to take advantage of that time by finding a new source of health insurance.

Even if you don’t think you’ll qualify for a subsidy, it’s important to check out all of your options and compare prices for policies.

Find new health insurance coverage for free by entering your zip code into the box below!

References:
  1. https://www.healthcare.gov/unemployed/cobra-coverage/
  2. http://obamacarefacts.com/questions/how-much-notice-to-cancel-employee-plan-or-change-benefits/
  3. https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/healthcarereformrescindingcoveragewhatistheno-rescissionofcoverageprovisionunderhealthcarereform.aspx
  4. https://www.healthcare.gov/blog/4-ways-to-apply-for-coverage-in-the-health-insurance-marketplace/

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