If you’re an employer who recently signed up for a group health insurance plan or an employee who’s gone through the process of enrolling in an insurance policy, you may ask yourself, “Can I change my health insurance plan mid-year?”
The good news is you’re not locked into your health insurance plan forever. However, there are rules for mid-year changes that vary based on if you’re an employer or an employee.
Employers can usually make plan changes anytime but face complex restrictions and potential penalties. Employees have more flexibility in what they can change but can only do so during specific enrollment times.
This blog will guide employers and employees through their options for making mid-year changes to their health insurance plans.
Can I change my health insurance plan mid-year?
Health insurance changes are generally done at the start of a plan year, giving your employees time to consider their options during the open enrollment period. However, as an employer, you may be able to make changes to your health plan at any point during the year.
While in some cases it may seem like a good idea to make changes to your organization’s health insurance policy, changing your employer-sponsored health plan outside of open enrollment could have some negative impacts on employees who participate in your plan. So check your current health plan document for any limitations or penalties.
If employees want to switch health plans or make changes to their current plan, they only have two periods to do so—during the open enrollment period or a special enrollment period.
The annual open enrollment period typically runs from November 1 to January 15, but the exact dates can vary depending on your state. During this time, employees can renew their existing health plan or search for other coverage options.
Depending on when enrollment in a health plan occurs, health insurance coverage usually begins on January 1 or February 1. For coverage to start on January 1, employees must enroll by December 15.
Employees can make as many health insurance plan selections and changes during the annual open enrollment period as long as they finalize their choice by the end of the period. Once the period is over, employees can’t make changes unless they have a qualifying life event> triggering a special enrollment period.
Which are the requirements to make changes outside the open enrollment period?
Even though employers can make changes to their current health insurance coverage at any time, they need to follow specific requirements to stay in compliance and avoid penalties if they make them outside of open enrollment.
Employers must consider the three requirements below when making mid-year plan changes:
- ERISA plan documents: ERISA summary plan descriptions and plan documents are legal documents containing relevant health plan information. If an employer makes plan changes, an ERISA summary of material modification document must be created and distributed to employees within 210 days after the plan year containing the change ends.
- Affordable Care Act (ACA) requirements: The ACA requires mid-year notification requirements in addition to ERISA’s requirements. Employers must give 60 days advance notice of plan changes before implementing them.
- Enrollment changes: When an employee’s health plan costs change mid-year, employees must be given the right to change their health plans, creating a mini-open enrollment for the employer’s affected employees.
- Employers should notify any relevant health insurance companies so they can approve and allow mid-year changes for employees as part of the mini-open enrollment period.
Outside of open enrollment, employees can only change their health plan during a special enrollment period if they meet certain eligibility requirements. A special enrollment period can occur at any point during the year and applies only to those who have experienced a major life event.
Several common events qualify individuals for a special enrollment period, including:
- Getting married, divorced, or legally separated
- Giving birth or adopting a child
- Beginning, ending, or losing employment
- Loss of eligibility criteria, such as turning 26 and losing your parent’s coverage
- A death in the family
- Moving to a new ZIP code or county
- Other qualifying events1
In most cases, employees have 60 days from the date of their qualifying life event to change or buy a health plan. Like open enrollment, employees can shop for and compare plans by working with a broker or visiting their state or federal health insurance marketplaces. Sometimes, health insurance providers may require proof of the qualifying life event before enrollment.
What kinds of changes can I make to my plan mid-year?
A popular reason employers make changes to their current health insurance plans is to control rising medical care costs. However, employers also make a few other common changes outside the open enrollment period.
The following are changes employers can make mid-year without penalty:
- Change in a current health plan: Employers may consider switching to a cheaper health plan tier, like a high-deductible health plan (HDHP), to help them and their employees save money on their monthly premiums.
- Many employers also consider switching plans if their employees’ services are adjusted due to a contract dispute or cancellation request between the insurance and their provider network.
- Employee contribution changes: Employers looking to make contribution changes to their health plan should review their liability under the ACA’s employer shared responsibility rules and confirm their new contributions continue to satisfy the carrier’s minimum participation requirements.
- They should also determine if their plan allows employees to change their benefit elections due to mid-year contribution changes.
- Waiting period: If an employer wants to add a waiting period to their employee’s health plan, they can do it mid-year. However, the ACA prohibits waiting periods of more than 90 days.
The IRS provides specific instances when employees can make mid-year changes to their health benefits coverage. Employees can make mid-year plan changes if they have a qualified life status change that would affect their health insurance policy.
Qualified life changes and eligible events include:
- Change in legal marital status
- Change in the number of dependents
- Death of spouse
- Change in dependent status, such as a dependent child losing coverage under another plan
- Change in employment status
- Loss of eligibility criteria
- A dependent called to military service
- Change in residence
- Entitlement to Medicare or Medicaid
- Significant cost changes in coverage
- Health Insurance Portability and Accountability Act (HIPAA) special enrollment rights
Employers aren’t required to allow employees mid-year election changes except if making changes under HIPAA special enrollment rights. For clarity, employers should include in their plan documents and summary plan description which circumstances entitle an employee to make mid-year election changes.
How employers can use an integrated HRA to provide their employees more coverage mid-year
Making mid-year health plan changes can be difficult for employers. If you want to provide a more robust health benefit for your employees, a health reimbursement arrangement (HRA) is worth looking into.
While some HRAs only work with individual health insurance plans, an integrated HRA, also known as a group coverage HRA (GCHRA), pairs with your existing job-based health insurance plan and provides more comprehensive health coverage to your employees.
Integrated HRAs work with traditional group health insurance to reimburse employees tax-free for qualified medical expenses not fully paid for in their plan, such as deductibles, coinsurance, copays, and other out-of-pocket costs. Only employees enrolled in your employer-sponsored health insurance plan can participate in the HRA.
With integrated HRAs, employers set a monthly allowance that works for their budget. While some HRAs have annual contribution limits, integrated HRAs have no minimum or maximum contribution requirements.
Unlike a health savings account (HSA), HRAs are not pre-funded accounts. The employer only pays out when employees submit medical costs for reimbursement. Additionally, unused allowance amounts stay with the employer if an employee leaves the company.
The great thing about integrated HRAs is that employers can sign up for one at any point during the year without an enrollment period. Integrated HRAs work with any group health plan, so there’s no need to make mid-year changes to your plan.
Employers can simply implement an integrated HRA to supplement their health plan and begin providing their employees with tax-free reimbursements to help them reduce their medical bills.
Choosing health insurance benefits is a big decision for employers and employees. If you’re an employer or employee that wants to make changes to your health plan, it’s important to understand the guidelines you need to follow.
If you’re an employer looking to improve your health benefit, implementing an integrated HRA at your organization is a great option. With an integrated HRA, you can offer your employees a more personalized health benefit to cover their medical care without changing your current group health coverage.
This article was originally published on May 11, 2022. It was last updated on May 19, 2023.