I’ve done a bunch of searching and can’t seem to find an answer to our situation. My wife and I are both currently on my employer’s PPO plan. She just started a new job and is in the SEP period for her employer’s health plan. Her employer offers a very nice HDHP with HSA. After crunching the numbers, it makes sense for both of us to join her plan and completely drop mine.
This is where my confusion starts. Her employer told her that during this SEP, we can both join her new plan and that they would provide me with a form to give to my employer to completely drop my insurance. Is this accurate? I’ve been trying to verify the process, but have not been able to find anything.
Also, as a follow-up, I have an FSA through my current plan. I assume that if I am able to drop my plan during this SEP, I need to spend the FSA before the process is completed. Is that also correct?
I will be speaking to my employer as well. They can be somewhat difficult to deal with at times (private company), so I wanted to ask here first and have as much information as possible.
Hello! During a Special Enrollment Period (SEP), it’s indeed possible for both of you to join your wife’s new HDHP and drop your current PPO plan. Your wife’s employer should provide a form confirming your new coverage, which you can then give to your employer to cancel your current insurance. Regarding your FSA, yes, you would typically need to use any remaining funds before switching plans, as FSAs usually don’t transfer between employers. Speaking with your employer and reviewing both plan details will ensure a smooth transition. Good luck!
Your wife is eligible to enroll as a new hire as she has a new job. The qualifying life event, or QLE, that will enable you to revoke coverage via your employer is for you to enroll her and yourself in your wife’s plan. Proof of your other active coverage is required by many (but not all) employers before they will remove any existing insurance elections. Proof may or may not be required by your employer, therefore you’ll need to have it.
The only thing to check and make sure of is that MOST employers only offer you 30 days to make any changes, which is 30 days from the date your wife’s insurance becomes active. A few businesses grant 60 days, but the majority only give 30, and if you miss that deadline, even by a day, they may not accept it.
You will need to spend down your FSA balance. Once your insurance expires, you will no longer have access to it (and will lose any remaining funds) unless you chose COBRA… but, because you are receiving an HDHP/HSA coverage through your wife, if you continue to use the non HDHP/HSA plan at work, you will be unable to contribute to the HSA. One of the requirements for opening and contributing (or accepting employer contributions, if your wife’s job provides them) is that you have no disqualifying coverages. A disqualifying coverage is any non-HDHP/HSA eligible insurance (like a PPO or EPO that gives “first dollar coverage” like you only have to pay a minimal copay for an office visit.
Very well put.
Additionally, OP should know that they have the right to spend down the remaining balance of their FSA, even if they have not “earned” all of the contributions for the year through payroll.
IE- when their FSA began, they were granted access to all of their contributions at the start of the year and have been “making payments” with each paycheck.
It doesn’t matter if they spend the entire amount in the first month and subsequently cancel their FSA coverage; they won’t have to pay anything back.