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Dependent coverage?


Guest Mr. Kite
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Guest Mr. Kite

Health plan covers employee, employee's spouse, employee's children under 18, and employee's children 18-25 that "depend on you for more than 1/2 support." I have a situation in which the employee is divorced with a 20-year-old child in college, with "joint custody" of the child with her ex-spouse, but ex-spouse pays most of child's expenses. Under the divorce decree the employee is obligated to provide the child's health insurance.

Generally, how do health plans determine whether the support test is met in this type of situation. It would appear that the child may not be eligible because the ex-spouse, rather than the employee, provides more than 1/2 support. On the other hand, by the reasoning the child would not be eligible if the parents are still married, but the employee makes less than her spouse.

Any guidance or insight into this type of situation would be greatly appreciated.

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I think you should look at the new rules from the IRS that covers this topic in depth. Also is there a QMSO in this case? Then you would be under court order to comply.

It is Rev Proc 2008-48 ....26 CFR 601.105

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I think we have to assume that the op was describing the petinent plan language completely and accurately. Given that, what IRS rules could be relevant? Maybe you are assuming that the plan limits eligibility to 18+ children only if they are the employees' tax dependents, but evidently there is no such direct linkage.

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Guest Mr. Kite

There's no question that the child constitutes a "dependent" for purposes of IRC 105/106 (and the plan has as a minimum requirement that the child meet this definition) -- the only concern is whether the child is eligible under the terms of the plan. In particular, the child must rely on "you" (i.e., the covered employee, not both parents together as is the case under IRC 105/106) for more than 1/2 support. For example, suppose that parents (even married parents) have equal income and together provide 100% of the child's support (and therefore each provides 50% of the child's support) -- in this case, neither parent provides MORE THAN 1/2 of the child's support, and therefore the child would not be eligible.

This appears to be fairly standard language in health insurance plans, and it seems that the question would have come up at some point.

This may be splitting heirs (bad pun, sorry), but if a $1 million medical claim comes up it would be nice to know in advance whether coverage is available.

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Mr. Kite,

Does the particular state's law require dependent coverage in situations that might not be encompassed by the plan's language of rely on the EE for more than 1/2?

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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Guest Mr. Kite
Mr. Kite,

Does the particular state's law require dependent coverage in situations that might not be encompassed by the plan's language of rely on the EE for more than 1/2?

I don't believe so.

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Guest Mr. Kite

mrsntc -- as I understand QMSCOs, the plan cannot be required to provide coverage that it doesn't otherwise provide. For example, if a plan does not cover dependents, it can't be required to cover an employee's child.

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  • 4 months later...

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