In 2019, the Bureau of Labor Statistics reported that 87% of full-time civilian workers had access to medical care benefits while only 74% participated in their employer’s healthcare plan. There are several reasons why employees decide to waive health insurance coverage. Regardless of the reason, the employer must ask those employees to sign a health insurance waiver form. An insurance waiver is a document that includes the employee’s “declaration that you have been offered a plan, however, have chosen to refuse” the coverage offered and why. Depending on the organization or reason for the request, an employee may be required to provide proof of outside coverage. Learn why employees would waive coverage, what’s included in a health insurance waiver form, and the consequences of opting out. Plus find out five important best practices regarding health insurance benefits every employer must follow.
What’s included in an employee insurance waiver form
Sometimes employees decide to waive employer-sponsored health insurance coverage—waiving or waving meaning that the employee is opting out of the plan. When this happens, the employer will provide a health insurance waiver or medical waiver of coverage form from the insurance carrier for the employee to sign annually. It is recommended that employers keep a copy of the signed insurance waiver form on file to prove compliance with federal and state regulations.
The employee medical waiver form includes the following information: name, Social Security number, employment date, who the employee is waiving coverage for, and why. For example, the employee would check the appropriate box that indicates they are declining coverage because they are covered by a spouse’s group coverage, enrolled in another plan, Medicare recipients, or other reasons. It’s important for employers to prove that an employee has been given the opportunity to apply for coverage and have elected not to enroll.
When waivers of coverage are provided
A health insurance waiver is only offered during certain periods of time in the employment cycle. For example:
At time of hire.
During annual open enrollment, when employees can choose to change or adjust coverage options.
When the employer-sponsored plan changes.
When the employee has a family status change such as marriage, divorce, or birth or adoption of a child.
If an employee waives coverage one time, it isn’t a permanent decision. An employee that has previously opted out by signing an insurance waiver, can elect to participate in the health plan during open enrollment or if they have a qualifying life event.
However, employees should be instructed to carefully read and understand the waiver they are signing. Every insurance carrier and employer is different, so there may be different rules regarding the employee’s ability to be added to a group health plan if circumstances change. According to one source, “your health insurance waiver may include a clause, for example, if your family situation changes, you gain a 30-day window to enroll due to your change of circumstance.”
Five things employers need to know about coverage responsibilities
It’s important for businesses of all sizes to understand their responsibilities regarding health coverage, what to do when employees sign a medical waiver, and the penalties associated with noncompliance. For example, in 2019 under the Affordable Care Act, employers with 50 or more full-time employees will incur penalties for not providing health insurance coverage.
To maintain compliance, employers must understand if and when they are responsible for:
1. Offering health insurance coverage to employees.
2. Distributing insurance waiver forms to employees who opt out.
3. Collecting and storing signed waiver forms for at least three years.
4. Ensure payroll accurately reflects insurance deductions if applicable.
5. Adjust insurance plan enrollment and payment as new members enroll or drop coverage.
Understanding health insurance, benefits, and medical waivers
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