Employee participates in Company's cafeteria plan and elects family medical and dental coverage. Employee's spouse is convicted of an offense under state law and imprisoned for up to 5 years. While spouse is incarcerated, medical expenses will be covered by the state. In addition, Company's medical plan provides that it will not reimburse medical expenses incurred while an individual was covered under another governmental plan or program. Can the Employee validly drop the spouse's medical and dental coverage due to a change in status event or is the Employee required to continue covering the spouse until the next open enrollment period?

I would allow the change because the spouse had a change in address and also is now eligible for other coverage. I would look at this as if the spouse just started a new job where they are now eligible for coverage.