Adjusting Benefits: Reducing Hours or Enrolling in an Exchange Plan

Under certain conditions, participants in a group health plan can revoke their coverage if they experience a reduction in hours worked or enroll in a Qualified Health Plan (QHP) through a Marketplace (federal or state exchange).

Changes due to reduction in hours or enrollment in an Exchange Plan. A Participant may prospectively revoke coverage under the group health plan (that is not a health Flexible Spending Account) which provides minimum essential coverage (as defined in Code §5000A(f)(1)) provided the conditions below are met. 

Reduction in Hours

For the reduction in hours scenario, the participant must have been expected to average at least 30 hours per week but now anticipates averaging less than 30 hours. They can revoke their coverage if they enroll in another plan that provides minimum essential coverage, with the new coverage starting no later than the first day of the second month after the original coverage is revoked. The administrator can rely on the participant's reasonable representation for future enrollments.

Conditions for revocation due to reduction in hours of service:

(1)          The Participant has been reasonably expected to average at least 30 hours of service per week and there is a change in that Participant's status so that the Participant will reasonably be expected to average less than 30 hours of service per week after the change, even if that reduction does not result in the Participant ceasing to be eligible under the group health plan; and

(2)          The revocation of coverage under the group health plan corresponds to the intended enrollment of the Participant, and any related individuals who cease coverage due to the revocation, in another plan that provides minimum essential coverage with the new coverage effective no later than the first day of the second month following the month that includes the date the original coverage is revoked.

The Administrator may rely on the reasonable representation of the Participant who is reasonably expected to have an average of less than 30 hours of service per week for future periods that the Participant and related individuals have enrolled or intend to enroll in another plan that provides minimum essential coverage for new coverage that is effective no later than the first day of the second month following the month that includes the date the original coverage is revoked.

Enrollment in Qualified Health Plan (QHP) 

Regarding enrollment in a QHP, a special enrollment period or the annual open enrollment period allows the participant or related individuals to enroll. The revocation of coverage under the group health plan must align with the intended enrollment in the QHP, effective no later than the day after the original coverage ends, and the administrator can rely on the participant's reasonable representation for this.

Conditions for revocation due to enrollment in a Qualified Health Plan:

(1)          The Participant is eligible for a Special Enrollment Period to enroll in a Qualified Health Plan through a Marketplace (federal or state exchange) pursuant to guidance issued by the Department of Health and Human Services and any other applicable guidance, or the Participant seeks to enroll in a Qualified Health Plan through a Marketplace during the Marketplace's annual open enrollment period; or

(2)          One or more related individuals of the Participant is eligible for a Special Enrollment Period to enroll in a Qualified Health Plan through a Marketplace (federal or state exchange) pursuant to guidance issued by the Department of Health and Human Services and any other applicable guidance, or related individual(s) seeks to enroll in a Qualified Health Plan through a Marketplace during the Marketplace's annual open enrollment period; and

(3)          The revocation of the election of coverage under the group health plan – either revocation in whole or revocation of other-than-self coverage – corresponds to the intended enrollment of the Participant and/or any related individuals who cease coverage due to the revocation in a Qualified Health Plan through a Marketplace for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked.

The Administrator may rely on the reasonable representation of a Participant (on behalf of themselves or related individuals) who has an enrollment opportunity for a Qualified Health Plan through a Marketplace that the Participant or related individuals have enrolled or intend to enroll in a Qualified Health Plan for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked.