Insurance

[dkredbird]

What is the name of your state? Texas


I started a job in November and I was working 6 twelve hour days. When insurance enrollment came I took the insurance. It's a bit pricy, but I figured with all the overtime I could afford it. The problem is now that they have cut hours back to 40 hours a week. And at 8 dollars an hour I can't afford $500 a month for health insurance and still pay my bills and eat. I tried to cancel the insurance but was told I couldn't due to the fact that it was done on a pretax basis. I have gone to the human resources person and still was told I can't cancel unless i get another insurance policy and show it to them. I have a friend in human resources and she told me there is no way they can make you keep insurance if you don't want it or can't afford it. This is putting a very big financial burden on me. Can someone help? Any and all advice is truly appreciated.

 

[cbg]

Your friend in human resources is only partially correct. But one very important question that makes ALL the difference in the answer to your question: is your portion of the premium taken out of your paycheck pre-tax or post-tax?

 

[dkredbird]

The insurance is taken out pre-taxed. I really don't see where there is a difference. If there is maybe you can explain it to me. At this rate I can't afford to work. I also tried to drop my family benefits and just keep me insured bu they won't do that either.

 

[cbg]

I'm sorry, I see where you did say it was pretax. My mistake.

To put it bluntly, it makes a difference because the law says it does.

Section 125 of the IRS code is the law that makes it possible for you to have your premiums taken out pre-tax, which in the long run benefits both you and the company. However, the flip side of the coin is that the same law strictly regulates and limits the times when you can make changes to your initial insurance election.

On a Section 125 plan, such as yours, you can ONLY make changes to your initial election at open enrollment or when there is a qualifying event. For the most part,qualifying events are limited to changes in your family situation such as marriage, divorce, birth or adoption. A change in your hours does NOT meet the definition of a qualifying event under the law.

Every Section 125 plan MUST offer an open enrollment period once every 12 month period. However, there is no way for me to tell you when your company's open enrollment period is. It is generally at the time the insurance plan renews, which could be any time of year. During open enrollment, you can make any changes you want; add dependents, drop dependents, or drop the coverage altogether; and the changes become effective the first of the next month. For example, if open enrollment is April, the changes become effective May 1.

You will be able to make any changes you want to when open enrollment comes around. Until then, though, your employer would be in violation of the law if they were to allow you to stop paying for the coverage you initially elected, regardless of how much of a financial burden it might be. They are even bending the law by allowing you to drop if you can bring proof of other coverage; while suddenly becoming eligible for coverage that you weren't eligible for before (such as through a spouse, or if you started going to school part time and the school offered coverage) is a qualifying event, going out and buying new, less expensive coverage for yourself is not.

I think I know what your HR friend is thinking of, but she's wrong in thinking that it applies in your situation. If you and your family are all covered on your insurance, and at the time of the plan renewal (which would be open enrollment for you) your rates go way, way up, that would trigger a qualifying event for you to change to your husband's insurance, assuming his employer offers it. But your hours changing so that the insurance is now a financial burden does not meet the standard.

She is technically correct in that you cannot be forced to accept the insurance. If you absolutely insist, your employer will cancel your coverage. BUT since this is a Section 125 plan, they CANNOT legally stop taking the premium payments EVEN IF they cancel at your insistance. So you would be paying for insurance that you are no longer eligible for. FAR better, since they cannot legally stop taking the payments out of your checks until open enrollment or a qualifying event, that you stay on the plan and be able to utilize the insurance if you need it.

I'm sorry I can't give you the answer you want, but your employer is acting legally.

 

[dkredbird]

Thanks for the information. From what I read if my son is in college and the college offers insurance I can drop him from my policy and have his own. It's even less expensive that way. I guess because this is a small company the insurance is very expensive.

 

[cbg]

"From what I read if my son is in college and the college offers insurance I can drop him from my policy and have his own"

That would apply only when he FIRST becomes eligible for insurance at the college. If he first became eligible at the beginning of the semester, it is not a qualifying event to suddenly decide to pick it up now. You would still have to wait for open enrollment.

 

[ablessin]

They are correct, you can't just drop insurance because you can't afford it - especially since it's pre-tax deduction/

One should NEVER base long-term bills/expenses on Overtime, UNLESS your comapany guarantees permanent overtime hours and pay - and few companies that I know of do that because it's so costly.

I have learned that lesson the hard way.

Now, you're going to have to sit back and wait - MOST open enrollment is in November so that the changes can take place January 1.... you're going to have to suck it up between now and then.

Sorry - I know it's not what you wanted to hear

 

[cbg]

MOST open enrollment is in November so that the changes can take place January 1

I disagree with this. First of all, every place I've ever worked, a November open enrollment would be for a December 1 change. Secondly, in my experience, and I have quite a lot of it, many, many companies actually renew their policies on July 1 rather than January 1.

 

[ablessin]

well, most employers in NYS have open enrollment in November - december, process the paperwork in december and any changes take effect January 1 of the new year.

It's always a huge thing 1/1 where I work that they stress to registration staff in the patient areas to VERIFY patient's insurance coverage - it's a bigger deal in January than the rest of the year just for that reason.

I can see the 7/1 being that is the beginning of the new fiscal year. But in the 8 years that I have been with this company it's been november open enrollment that is open for about 5-6 weeks. Of course, there are over 10,000 employees so they need those 2-3 weeks mid decemeber to process all the changes that are happening.

Either way, this person has at minimum 3 more months to pay his premiums before he can think of making a change.
Still no one should base long term financial commitments on overtime pay. Because you just never know what is going to happen tomorrow

 

[cbg]

Actually, I misspoke. I worked for one major company (a national insurance carrier - you'd know the name if I posted it) that had open enrollment for its employees in October for a January 1 effective date. The rest of my employers have been small groups where it was possible to do it one month, for an effective date of the following month.

You have no way of knowing that the poster has a minimum of three months left before she can make changes. While January 1 and July 1 are certainly the most common dates, nothing in the law limits companies to those two dates. I worked for one company that used their fiscal year, which was September. A hospital I contracted with for a while used April, since that corresponded with the union contracts. It can be any month of the year - and in fact, it doesn't even HAVE to be the first of the month. Many of my clients while I was working for the insurance carrier used the 15th of the month, and one, for some strange reason I never fathomed, used the 7th.

Just because your employer uses November and your region tends towards a January 1 date, does not mean that the rest of the country concurs. You need to be careful about making declarative statements like "she has a minimum of three months to wait" when that's not borne out by either law or custom.

 

[ablessin]

Sorry - I guess somewhere in the post I took that the open enrollement was either going to be for July of January.

I didn't realize that it could be any month of the year.......... seems like the first of the month would make most sense, and yeah the 7th is kinda strange.

well - live (read) and learn.

thank you!