My employer "accidentally" included my wife in my health insurance plan. (They are now saying that they don't cover spouses). They retroactively voided the plan without informing us. We thought she had coverage, but due to their mistake, we are stuck with medical bills. Can my employer do this? Does PPACA apply since it was their mistake for enrolling her?
This practice is known as "rescission". It is legal under 45 CFR §147.128 in some circumstances. The regulation says
(a) A group health plan, or a health insurance issuer offering group or individual health insurance coverage, must not rescind coverage under the plan, or under the policy, certificate, or contract of insurance, with respect to an individual (including a group to which the individual belongs or family coverage in which the individual is included) once the individual is covered under the plan or coverage, unless the individual (or a person seeking coverage on behalf of the individual) performs an act, practice, or omission that constitutes fraud, or makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage.
The law also prohibits surprises:
A group health plan, or a health insurance issuer offering group or individual health insurance coverage, must provide at least 30 days advance written notice to each participant (in the individual market, primary subscriber) who would be affected before coverage may be rescinded under this paragraph (a)(1), regardless of, in the case of group coverage, whether the coverage is insured or self-insured, or whether the rescission applies to an entire group or only to an individual within the group. (The rules of this paragraph (a)(1) apply regardless of any contestability period that may otherwise apply.)
Note that the regulation pertains to insurance plans, and not employers. The employer may in good faith believe that you are stuck with the medical bills, but their opinion does not matter as far as this regulation goes.
However, the employer also does not have the right to "declare" on behalf of the insurance company that your wife was covered. If you assume that she had coverage because the employer (mistakenly) said you did, but there was actually no coverage, then that is between you and the employer, or possibly you and the doctor. A prior question is whether she was actually covered in that past period. The contract between the insurance company and the employer might hypothetically state that only employees are covered, and may have accidentally submitted enrollment information with mistaken information ("X is an employee"). Since there was no intentional misrepresentation (we assume), coverage cannot be rescinded.
Also note that rescission is retroactive cancelling, not prospective cancelling ("henceforth, you are not covered").
Can my employer do this?
From my perspective, no, the employer cannot do that at this point in time. You might a viable claim of promissory estoppel and/or one of breach of contract.
To obtain recovery in promissory estoppel, plaintiff must establish
(1) [a] promise which (2) the promisor should reasonably expect to cause the promisee to change his position and (3) which does cause the promisee to change his position (4) justifiably relying upon the promise, in such a manner that (5) injustice can be avoided only by enforcement of the promise.
You mention that:
They retroactively voided the plan without informing us.
Absent any information to the contrary, this quote suggests that coverage of your wife was not merely your misunderstanding, and that the employer even took steps to insure your wife.
From this standpoint, your reasonable reliance on the employer's promise can be inferred from employer's conduct prior to voidance of the plan. If you cannot prove that the employer took steps to insure your spouse, then you would need alternative proof that the employer made that promise to you.
By voiding the plan and failing to timely update you on the voidance of coverage, the employer negligently led you to believe that the promise of spousal coverage was still in force at the time your wife incurred medical expenses. Thus, in line with the prima facie elements of promissory estoppel, the only way to avoid injustice is to compel the employer to honor the coverage up to the point in time when they notified you that the plan was voided.
The employer would be in an even worse position if your contract or a binding document reflects coverage of the spouse. Hence my mention of breach of contract. Unless you and the employer agree to an amended contract, the employer cannot disavow its commitment to spousal coverage under pretext that it was "accidental".