As owner of a small business, can I cancel our group medical insurance policy without giving notice?

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As owner of a small business, can I cancel our group medical insurance policy without giving notice?

Asked on April 10, 2013 under Employment Labor Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Yes, you can, subject to the following:

1) review the policy: if it provides for any penalties for early cancellation, or indeed does not permit early cancellation, while you can cancel it, you may find yourself paying fees, penalties, or even potentially the employer portion of dues for the balance of the year (since the policy is a contract, you are bound to whatever terms the contract has);

2) there are some  circumstances under which you could you be liable to employees for early or unexpected cancellation:

a) if any employees have employment contracts guarantying them health insurance;

b) if any employees recently left another job or relocated to take a job with you based on a promise of health insurance;

c) if any employees have already scheduled expensive medical procedures based on the fact that they have health insurance.

In the cases set out in a) - c), the employee has a protectable interest in the health insurance, based in either contract or promissory estoppel, and so you could be liable for their medical costs.


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