Employee Waivers of Group Health Coverage: Employer Guide

A waiver is a signed record that an eligible employee declined your health plan. Here is how it affects participation, the ACA mandate and special enrollment.

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What A Waiver Is And Why You Collect One.

A waiver of coverage is a form an eligible employee signs to say they are declining the group health plan you offered. Employers collect it for three practical reasons. It records that the employee was actually given the choice. It tells the carrier why enrollment is lower than the eligible headcount. And it preserves what the employee was told about coming back to the plan later.

No form is magic. Nothing in the federal or Michigan provisions we reviewed prescribes a particular waiver document, so the useful question is what your carrier contract and plan document ask for, and what you would want to be able to show a year from now.

Waivers And The ACA Employer Mandate.

Section 4980H of the Internal Revenue Code (26 U.S.C. 4980H) applies to applicable large employers, those averaging at least 50 full-time employees in the preceding year. The core assessment under subsection (a) is triggered when such an employer fails to offer full-time employees and their dependents the opportunity to enroll in minimum essential coverage. The test is the offer, not the enrollment.

The regulation makes the same point. Under 26 CFR 54.4980H-4(b), coverage is not treated as offered for a plan year unless the employee had an effective opportunity to elect to enroll at least once for that plan year. A signed waiver is good evidence that the opportunity existed. It does not prove the offer met affordability or minimum value, and it does not cure a coverage gap for an employee who never received the offer.

Employers below the 50 full-time employee threshold are not applicable large employers under 4980H, though the carrier participation rules above still apply to them.

What A Good Waiver Form Records.

Keep the form short and specific. At minimum, capture the employee’s name, the plan year or hire date it covers, the coverage offered, a signature and a date. Then add three items that earn their space.

First, the reason for waiving, such as coverage through a spouse’s employer, Medicare, Medicaid or no wish to enroll. Second, the other coverage, including who provides it, so you can answer a carrier’s question about participation. Third, a plain statement of special enrollment rights. Federal rules at 29 CFR 2590.701-6 let an employee who declined because of other coverage enroll later after losing that coverage, and a plan must allow at least 30 days to request it. A plan may also require the employee to state in writing that the other coverage is the reason for declining, but only if the employee was told of that requirement and its consequences at or before the time of declining. If you want that option, the waiver form is where the notice belongs.

Retention is the open item. We have not confirmed a single federal retention period for waiver forms, so ask your counsel and carrier. As a habit, keep each signed waiver with the plan year enrollment records for as long as you keep those.