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Can an employer cancel a group plan while, not only giving no prior notice, but leading employees to believe they're covered?

Amelia, OH |

I was admited through the ER on Oct 20 2012 from severe stomach pain and ended up having my gallbladder removed. On the way home I stopped to get my meds filled and was informed my insurance had been canceled since Oct 1 2012. My employer held out the premium for the insurance on Oct 18 2012, two days before my surgery. At the first of Oct, we had a company conference call and was informed that our healthcare could possibly be dropped but, at that time was still covered. At the hospital, I was given the choice to have it done then or wait 6 weeks, so I went ahead and had it done since I knew I might possibly be loosing coverage. Not until Oct, 31 2012 was we informed that our insurance was dropped 30 days prior and we would be reimbersed the premium for the 18th, which I never was.

Attorney Answers 1


Generally speaking, employers cannot cancel a group health plan without some type of notice. Opinion differs as to whether it must be advance notice or notice concurrent with the cancellation. Regardless, notifying employees that their insurance coverage was cancelled thirty days prior does not seem to comply with the requirements of ERISA. You need to speak with an attorney in your area that practices in the areas of employment law and insurance law.

Lori A. Strobl
Strobl & Associates, Co LPA
1015 E. Centerville Station Rd.
Centerville, Ohio 45459
(937) 496-1450

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So under ERISA is there a notice required prior to the cancellation? I'm not even sure if there is any point in it now as the company was sold 3 months later. Everybody seems to think that's why the insurance was actually canceled. They made millions and I get stuck with a 25k bill because of it.

Lori Ann Strobl

Lori Ann Strobl


That question is not as easy to answer as you may think. According to the Office of Legislative Research "ERISA requires the sponsor of a group health care plan subject to its provisions to inform plan participants, including any former employees eligible for plan benefits, of (1) a material reduction in covered services or benefits within 60 days of adopting the change and (2) any other material modification to the plan within 210 days of adoption. Some courts have ruled that canceling a plan is not the same as modifying it and, thus, the ERISA notification rules are not applicable in such a situation. Rather, they held that ERISA rules regarding fiduciary duties are implicated, requiring the plan sponsor to promptly notify plan participants of an impending plan termination."

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