The Affordable Care Act is presenting employers with new challenges in managing benefit plans. The information in this section will help you stay informed about how to adequately administer your plans.

Rescission of Coverage

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For plan years beginning on or after September 23, 2010, group health plans and insurers are prohibited from rescinding (i.e., retroactively terminating) health care coverage except for instances involving fraud or intentional misrepresentation of a material fact. Advanced written notice of at least 30 days must be provided to the participant before coverage may be rescinded.

Termination of coverage is not a rescission if it only has a prospective effect or is effective retroactively only because the participant failed to timely pay the required premium contribution. Coverage may not be rescinded for certain administrative errors (e.g., mistakenly covering an ineligible employee); rather, the coverage must be cancelled prospectively.