If you’re an employer who offers a group health insurance plan or an employee enrolled in an insurance policy, you may ask yourself, “Can I change my health insurance plan mid-year?”
You’re not locked into your health insurance plan forever. However, there are rules for mid-year changes that vary depending on whether 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.
Takeaways from this blog post:
- Employers can generally make changes to their health insurance plan at any point during the year but must meet specific requirements to avoid penalties.
- Employees can only update or change their health plans during the open enrollment period or a special enrollment period triggered by a qualifying life event.
- Both employers and employees should carefully review plan documents and requirements before making any mid-year changes to a health insurance plan.
Whether or not you can change your health insurance plan mid-year depends on whether you’re an employer or an employee. Let’s explore scenarios for both groups below.
As an employer, you’ll generally make changes to your health insurance plan that take effect at the start of a plan year, giving your employees time to consider their options during the open enrollment period if they don’t want to enroll in your group coverage. However, you can typically make changes to your health plan at any point during the year.
While changing your organization's health insurance policy may seem like a good idea in some cases, changing your employer-sponsored health plan could negatively impact employee participation. So check your current health plan document for any limitations or penalties.
If employees have an employer-sponsored group plan, they may be able to switch from one plan option to another or cancel their plan mid-year if the following circumstances apply:
If an employee pays for their insurance premium with pre-tax dollars, they can only change their plan under specific circumstances.
If employees have individual health insurance coverage and 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 individual health plans 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 as they like during the annual open enrollment cycle as long as they finalize their choice by the end of the period. Employees can only make changes to individual plans once the period is over if they have a qualifying life event triggering a special enrollment period.
Typically, you can only make changes to your health insurance plan during open enrollment. However, there are a few instances where you can make mid-year changes, provided you meet specific requirements.
Even though employers can change their current health insurance coverage at any time, they must follow specific requirements to stay in compliance and avoid penalties if they do so outside of their plan’s open enrollment.
Employers must consider the three requirements below when making mid-year plan changes:
Employees with a group plan can only make changes to or cancel their plan if they experience qualifying “change in election” events. We’ll cover these in the next section.
Outside of open enrollment, employees with marketplace plans can only change their health plan during a special enrollment period if they meet specific 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:
In most cases, employees have a 60-day window from the date of their qualifying life event to change or buy a health plan. Like open enrollment, a special enrollment period allows employees to 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.
You may want or need to make changes to your health plan for various reasons. But, acceptable reasons will vary depending on whether you’re an employer or an employee.
If an employer is considering changes to its group policy due to a reason like rising medical care costs, there are a few ways it can modify its plan.
The following are changes employers can make mid-year without penalty:
The IRS provides specific instances when employees can make mid-year changes to their health coverage. For example, employees can make mid-year plan changes if they have a qualified life status change that would affect their health insurance policy.
Individuals must update their insurance provider about these changes, which may impact their eligibility, health insurance options, and monthly premium costs.
Qualified life changes and eligible events include:
Employers aren’t required to allow employees to make mid-year election changes except if they are making changes under HIPAA special enrollment rights. For clarity, employers should include in their plan documents and summary plan descriptions which special circumstances entitle employees to make mid-year election changes.
In some cases, employers make mid-year health plan changes to save money on their group policy. However, this can leave employees liable for covering a greater share of their medical costs. To combat this scenario, adding a health reimbursement arrangement (HRA) to your health benefit is worth considering.
While some HRAs act as a stand-alone health benefit, 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 employer health plans, like group health insurance, to reimburse employees tax-free for qualified medical expenses their plan doesn’t fully cover, such as deductibles, coinsurance, 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. This allowance can be as large or small as the employer chooses.
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 also work with any group health plan, so you can choose the group policy that works best for your team.
Employers can simply implement an integrated HRA to supplement their health plan and provide their employees with tax-free reimbursements for their medical bills.
Choosing a health insurance policy is a big decision for employers and employees. If you’re an employer or employee who wants to make changes to your health plan, it’s essential to understand the guidelines you need to follow.
If you’re an employer looking to improve your employee benefits package, 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 31, 2024.
1. https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/