Can an employee voluntarily cancel their benefits at any time if they no longer want them?

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Can an employee voluntarily cancel their benefits at any time if they no longer want them?

Can an employee voluntarily cancel their health, dental or vision coverage at the end of any given month? We don’t allow them to enroll at any time – just during open enrollment or if they have a qualified status change – however, they should be allowed to voluntarily cancel at any time, correct?

Asked on May 19, 2011 under Employment Labor Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Even though you would *think* that they could cancel at any time, that may not be the case. Many benefits--such as health plans provided by third-party health insureres, for example--are provided pursuant to contracts. Those contracts are for a definite term--typically a year--and may *not* be cancelled in the middle of that year unless some event has occured which, under the agreement with the insurer itself, allows for cancellation or modification of the plan. For example, if a worker's divorce is finalized mid-year, he no longer has to buy (indeed, he no longer can get) married or family coverage, since he is no longer married. Or the agreement may provide that it can be canceled if the worker comes under other coverage (e.g. a spouse). So for any benefit provided pursuant to an agreement with a third party, you need to look to the terms of that agreement or provision of coverage.


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