Section 125 cafeteria plans
Question
How can we get out of my husband's incredibly expensive workplace health insurance?
To make a long story not-so-short- we have Humana through my husband's place of work. Our rates have gone up HIDEOUSLY. They are taking $556 EVERY TWO WEEKS out of his paycheck. Yes, that's right- we are paying a little over $12,000 alone just in insurance this year. We had to accept to continue this plan because our 2 year old little girl has Epilepsy and she would not be covered under any other outside plans- at least not for a year- and it just so happens that this year alone is the worst year so far for her epilepsy as far has the price of her medications, neuro visits and increase in seizure activity. My husband is the only one working because I have to stay home with our daughter. This insurance takes MORE THAN HALF of his paycheck every two weeks. We are now at federal poverty level soley because of the insurance. When we contacted his employer HR person a week after enrollment to drop coverage- she told us we could not drop it because "Section 125 of our insurance contract states that we cannot because the insurance is pretaxed." The only way we could drop, as she said, was he would have to quit his job for another or..he would flat out have to die or have some other major event that would affect his status. If he left to go to another company- once again we have the issue with our daughter being a pre-existing condition. I have called at least 20 insurance companies and every single one has told me she could not be covered because she is high risk- plus the overall cost of her medication. We called the state health insurance board and we were told this type of plan is called a "Cafeteria" plan and sadly, it "screws" hundreds of thousands of people like us yearly. The person we talked to told us we would have to get a lawyer and pursue legal action if we wanted out of the contract. We are absolutely broke- we could never afford a lawsuit. There is no money for bills...nothing. Food is more important than bills- especially with a child- so we buy food instead while bill collectors call us non-stop. Can anyone please help us??? We can't even get our daughter on state insurance such as Medicaid because of the current insurance she has through her father's employer. Can we file a hardship- would that work on employers insurance? Can anyone help us at all? We are wanting out so that our daughter can get state health insurance or coverage through BCBS CoverKids Tennessee. As of now, we are told noone can be dropped off the plan at all.
6 months ago - 6 answers
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by Laura W- 6 months ago
Have you tried legal aid in your community for legal advice.
by lawman- 6 months ago
The tax status of your insurance should not affect whether you can drop it or not. Unless you have an employment contract requiring insurance you should just be able to drop it. If it requires a death, tell them your daughter is dead. How will they know? I curious question as to what you expect in terms of value from insurance. You pay 12k a year. A lot, yes, but what do you get for this? If you paid cash, out of pocket, would it be more than this? I guessing the answer is yes. Sounds like the insurance is a good deal. Why do you expect to pay a small amount when you are using a large amount of medical services? If getting more service than what you are paying for it getting "screwed", then I would encourage your husband to work extra hours and not get paid so the employer is no longer getting screwed. I know it sounds harsh, but your husband does not work for free, and you cannot expect the doctors and nurses and insurance people to do the same. Or expect someone else to foot the bill.
by snpuck- 6 months ago
You're fighting the IRS here, it's IRS Tax laws that say he can't change coverage without a qualifying event. There is no hardship, with the IRS. Most of the time, state insurance, you have to let the child go uninsured for six months before you qualify - not sure if you want to do that. You should probably contact your state department of family services - and see what they have to suggest. There might be a special program for special needs kids to help pay for your regular insurance premiums.
by mbrcatz- 6 months ago
There is nothing you can do. The "section 125" that your HR person mentioned is part of the IRS tax code. Its a federal regulation regarding cafeteria/pre-tax benefit plans. There are absolutely no exceptions to this - its not the employers rule or the insurance companies rule. The only way to drop an employer group plan outside of open enrollment is to have a "qualifying event" (the major life changes the insurer mentioned) or to quit the job. Or go from full-time to part-time employment status. Period. Don't waste your time or money with a lawyer - there's nothing that can be done. You're given the opportunity to review information and make your decisions regarding whether or not to accept coverage once a year. Unfortunately, you have to live with the consequences of your choice until the next open enrollment. (Or your husband can quit/reduce his hours/find another job, of course.)
by sarah314- 6 months ago