Ask the Expert

Notice of Health Insurance Cancelation and Termination

The ACA added a provision about giving an employee 30 days’ notice for cancelation of health insurance. Does this include termination of employment?

You are correct that the ACA instituted a new 30 day notice requirement that applies toinsurers and plans if coverage will be rescinded. A rescission is a cancellation or discontinuation of coverage that has a retroactive effect and, under the ACA, may only be made if there has been fraud or an intentional misrepresentation of a material fact related to the coverage.

If the plan will be cancelled for these reasons, then the insurer must provide at least 30 days’ notice to the beneficiary to enable him or her to appeal the decision or seek alternative coverage. More information on this ban on rescissions is available on the topical analysis page for Healthcare Insurance.

Therefore, this particular ACA notice requirement does not apply to cancellation of coverage due to termination of employment. However, keep in mind that COBRA doeshave notice requirements that apply to employees who will lose the ability to participate in group health insurance coverage after a qualifying event, including termination of employment.

Upon such a qualifying event (in this case, termination), the employer must notify the plan administrator within 30 days of that event. At this point, the insurer/plan administrator will provide the employee and qualified beneficiaries with an election notice to obtain continuation coverage under COBRA.