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Incarceration as a Qualifying Event?

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Employee's child is being incarcerated so employee wants to drop child from coverage. Jail is located within plan service area.

Would you consider this a qualifying event and allow the employee to drop the dependent's coverage? While sympathetic, I'm not sure I see it...

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Employee can drop his and/or his child's coverage under the health plan at any time for any reason.

I think your question is whether the employee can modify his cafeteria plan election to reduce his pay by the amount of the child's premiums for the entire cafeteria plan year. I recommend checking the cafeteria plan document for what it provides in "qualifying events" for election changes. Hopefully it includes the "change in residence" rule that would definitiely apply to the child.

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Yes, the question is regarding the cafeteria plan election. Unfortunately, this is not specifically addressed in the section 125 rules.

Change of residence alone is not necessarily a qualifying event; it must affect plan coverage.

All of our plans are managed care plans that require direction of care by a PCP. An incarcerated individual would not be able to access their PCP for treatment or referral, and the prison docs are not on our plans. Ergo, no care could be provided or referred by the PCP, thus the individual has effectively lost coverage under our plan. Because the incarcerated individual has had a change of residence affecting his/her access to coverage under the plan (just as if he/she had moved outside of an HMO service area), we have a qualifying event. Similarly, the end of incarceration would be a qualifying event that would allow the individual to be added back onto the plan.

I suppose we could have a different result if we had some other plan type. A plan with an out-of-network benefit could still provide some level of coverage, even in prison. And I understand that prisons may be becoming more sophisticated in their efforts to tap 3rd party payors. But even in that circumstance, the individual (or our employee, the parent) could seek coverage under an exchange (CA in this case). With no income, the individual would qualify for medicaid (Medi-Cal in our case), the acquisition of which would be a qualifying event that would allow the election to be changed.

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