Premium Only Plans and Layoffs

We are currently experiencing layoffs of varying lengths as well as reductions in pay.  Not all employees are able to afford health insurance on the shorter hours and reduced pay even with premiums being withheld on a pre-tax basis (POP).  It may take weeks before the decide to drop coverage.  What is the best way to handle this with the 30 day grace period for qualified events under a POP?


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  • I would think you'd still have to comply with IRS regs.  Change in job status (hours, pay, etc.) is considered a qualifying event.  The employee must still make the change within the 30 day period.
  • You need to educate the employees about the 30 day change window. That's about all you can do. Because once they opt-in, they are under the POP for the whole year except for the 30 day change window.

    You could put the whole plan in jeopardy if you start many exceptions. 

    One thing also to consider is if any reduction in hours causes them to be ineligible under the plan and will force them to move to COBRA.That gives them a bit more time to make the decisions, however it is at full cost unless the employer chooses to subsidize some of the COBRA payments.

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