Dropping health plan to save money

I have health insurance from my employer, and cover my family also.  The cost is around $300 per paycheck.  My wife lost her job six months ago, and we are struggling financially.  I’d like to temporarily drop our health plan, at least until we get back on our feet.  Can I do that?  I’m hoping she will find new work soon.  In the meantime, getting the $300 every two weeks would really help.

Bent But Not Broke Yet

Dear Bent But Not Broke Yet,

Yes, you can drop your employer’s health insurance without having a family status change or “qualifying event” (such as a marriage, divorce, birth of a child, etc.).    Your employer will allow you to drop your family, since you pay part of the cost.  If your employer pays for your coverage (meaning just you, the employee), you probably will have to keep that.  Contracts with insurers typically require employers to keep people enrolled whose coverage is fully paid by the employer.

Before you go ahead and drop the plan, keep in mind that your paycheck will not go up by $300.  You will now be paying full taxes on that.  There are calculators online that you can use to estimate how much more take home pay you will get.  The boost may be less than you hope.

Dropping the plan will also leave you to pay your family’s medical bills.  The medical bills could add up to more than the money you are saving.  Also, if you stay uninsured for more than two months, the health insurer will refuse to pay for any pre-existing medical conditions when you re-join.

Last, you would not be able to re-join the plan until you had a family status change, or until the plan has its annual enrollment period.  Hopefully, your family status change will be that your wife finds a job, but that may or may not happen as soon as you would like.   Check with your employer about any other rules on re-joining.

Dropping your health plan is a tough way to boost your income for a few months.  There may be other options to consider, such as cutting your cable bill or giving up your cell phone data plan.

 

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.