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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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