employer cancelling medical benefits

[anne42]

What is the name of your state (only U.S. law)? Texas

I work on Fort Hood for a government contractor. The contract I work on is made up of several companies. I work for one of the subcontracts; my husband works for the parent company of the contract.

Initially, the parent company required all of the subs to use the same medical and dental coverage. They wanted all things equal.

Earlier this month, the parent company decided to cancel that requirement because their medical benefit provider raised rates. The parent company no longer wants to pay the higher premiums for the employees of all the subs.

My company (a subcontractor) decided that it would continue offering benefits to all exempt employees. Non-exempt employees would no longer have medical or dental insurance, but would be given an extra few dollars per hour in lieu of benefits.

With health care being so expensive, and with a pre-existing condition, purchasing individual coverage is not an option for me. Being added to my husband's plan, however, is a viable option. They are in an open enrollment period, and last week his HR people told him that yes, he could add me.

Today, they told him that I could NOT be added to his medical and dental plans because "my being dropped by another company was not considered an event worthy of adding me to his insurance plan." They also said that the only way I would be able to receive coverage would be to quit or be fired.

I understand that offering 'in lieu of' money instead of benefits is legal under DOL and SCA policy. However, I question the legality of the company's excuse that this is not an event 'worthy' of adding me to his existing plan - especially since it is an open enrollment period, and he is paying for the benefits anyway.

Can anyone give me any legal advice, or point me in the direction of someone who can?What is the name of your state (only U.S. law)?

 

[cbg]

Did you say that this is the company's annual open enrollment period?

I have an answer for you either way, but the answer is different depending on whether this is an OE period for the company as a whole or not, so please be specific.

 

[anne42]

Did you say that this is the company's annual open enrollment period?
I have an answer for you either way, but the answer is different depending on whether this is an OE period for the company as a whole or not, so please be specific.

My husband works for the parent company and yes, it is open enrollment for them (and he is trying to add me to his medical plan). My husband is also an exempt employee, so he will be retaining his benefits.

The subcontractor I work for will no longer be offering benefits to me as I am a non-exempt employee, so OE as it applies to me and them is probably a moot point, however, no, my subcontractor is not in an OE period. They are, however, enrolling exempt employees who choose to take the insurance the company is offering.

 

[cbg]

If it is OE then it doesn't make one bit of difference why he wants to add you; he has that right.

If they refuse to allow him to add you to the coverage during OE, contact the US DOL regarding a potential ERISA violation and quite possibly the IRS as well. Tomorrow when I'm at work I may be able to give you specific statute references. If I can, you might want to have your husband give those references to his HR before he files a complaint, in case things can be resolved that way.

 

[anne42]

Thank you very much for your advice. Their HR person was supposed to check in to it and give him a final answer tomorrow. I don't WANT to threaten legal action, but want to be prepared if this situation goes sour (and I expect it will).

 

[scadv]

Not only can he add you during OE; but you loosing coverage is a qualifying event as well.

I would call the actual insurance carrier and ask them, then get their answer in writing and take it to the HR people.

You could also do the same with your state DOI office (this might be a better route)

HR people unfortunately are not insurance experts, but that is a pretty big mistake!

Either way, I would give them written proof before reporting them to the DOL and state insurance regulators.

 

[cbg]

It's not insurance law that determines when additions can and cannot be made; it's the IRS regulations under Section 125. Calling the insurance carrier is not going to do any good; they are not the ones who can make the decision and they cannot override the employer. Nor does the DOI.

With all due respect, scadv, this is what I do for a living and have done for the last 30 years. I know you mean to be helpful but you don't have things quite right and can in all innocence end up hurting instead of helping.

 

[scadv]

It's not insurance law that determines when additions can and cannot be made; it's the IRS regulations under Section 125. Calling the insurance carrier is not going to do any good; they are not the ones who can make the decision and they cannot override the employer. Nor does the DOI.

With all due respect, scadv, this is what I do for a living and have done for the last 30 years. I know you mean to be helpful but you don't have things quite right and can in all innocence end up hurting instead of helping.

With all due respect I have multiple Group Health Accounts, some with 300+ participants. I handle issues like this all the time when HR departments mess up.

The Insurance Company,state DOI, and state DOL will know the answer to this and all of them would be able to provide guidance and references to the applicable law/code/documentation.

The Insurance Company already has a relationship with the Employer.
They already help to provide guidance for the plan.
A simple 3 way call to the Insurance Company with HR on the other line would solve this real quick. (I know this from experience)

And the Insurance Company most certainly knows the laws affecting the plans they provide; the state DOI most certainly knows the DOL regs for the Group Health plans that they approve in that state.

 

[cbg]

Except that it's not state law at all that manages this; it's Federal.

 

[scadv]

Except that it's not state law at all that manages this; it's Federal.

Very true.

But state law regulates Insurance, and the state DOI knows the DOL regs that Group Health plan sponsors must abide by.

The only reason I mentioned the DOI is because they are a lot easier to get a hold of and to get an answer from in my experience. I have had to contact both multiple times, and I would much rather deal with the DOI.

When she calls the DOI she will get an answer directly from them.
When she calls the DOL they will redirect her to her state or local office, who will then transfer her to her local EBSA office.


But as I stated before, the Insurance Company could clear this up in about 5 minutes. They know the laws that govern their plans.