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2x year eligibility review, pre-tax election changes?


jsb
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Still working through some questions and issues on a plan I took over several months ago. Finding some design issues that are unfamiliar to me and which make me nervous regarding our legal compliance. But just because I haven't seen them before (10+ yrs of plan admin experience) doesn't mean they're a problem. But they might be ... which is where I hope to draw on your collective experience for some insight. Your thoughts and comments on the following situation would be greatly appreciated!

Health plan provides employee-only coverage for part-time workers who average more than 25 hours per week over the previous 12 months, following 3150 hours of continuous service. Eligibility is determined in June and December each year looking back at the previous 12 months, with coverage effective in January and July. Plan covers approximately 160 of 350 total PT workers, with approximately 20-30 rolling onto or off of coverage at every review. PTs losing coverage are offered COBRA. PTs becoming eligible are offered employee only coverage (ee pays 20% of premium cost, pre-tax) or are allowed to waive coverage. No response by employee defaults to enrollment in the plan. At each review, waiver employees who have continuing eligibility are also offered the opportunity to enroll. Waivers who do not respond are continued in waiver status. At other times during the year, standard Qualifying Event rules are observed to permit eligible PT employees to drop their coverage or enroll from waiver status. Plan year starts July 1. This plan is different from, and more limited in scope and provider selection than the plans offered to regular full-time employees. Due to the ACA, this plan requires some design changes (eliminate service requirement, add availability for minor dependent coverage) this coming July 1.

The issue at concern is offering a 2nd plan enrollment opportunity and pre-tax salary reduction election to employees with continuing eligibility who have previously waived coverage. This only applies to the January enrollment window as it does not coincide with the start of the plan year. I suppose we could look at this as a "special enrollment" opportunity, but it's really just a normal part of the plan design. Does anybody have a concern regarding the mid-year pre-tax election changes, either for continuing waivers who now want coverage, or for continuing enrolled ee's who want to drop mid-year?

Thanks in advance!

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The "special enrollment" in 1.125-4(b) is something different than the annual enrollment period.

Annual enrollment is in 1.125-2 http://www.gpo.gov/fdsys/pkg/FR-2007-08-06/pdf/E7-14827.pdf and requires the election be irrevocable for the plan year, except as may be permitted under the change in status rules in 1.125-4

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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It sounds like my "easy" fix is to stop the practice of offering previously waived PT employees with continuing eligibility the opportunity to enroll at the mid-year eligibility review window. Someone first gaining eligibility could make an election; someone losing eligibility could have their election revoked; but someone currently waived with continuing eligibility could make an election change ONLY based on a QE, but not just because it's our mid-year eligibility review and they are still eligible.

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