Sandra Pearce

Another point which you may need to consider is whether the supplemental life insurance is being paid by the employee with pre-tax premiums. In which case I believe the premiums are then considered to be employer payments.

The original post says that the benefit is offered through a qualified Section 125 plan. In order to continued to be a qualified plan you must follow the rules of the plan. A allowable event has to have happened in order to permit an election change. The future possible divorce or legal separation is not an acceptable reason to allow the drop.

In our health plan we have had a situation similar to your situation no. 1. We considered the documentation provided by the employee's spouse and the circumstances and treated it as we would a "birth." However, in our case the newly eligible dependent was also newly living with the employee and spouse. If the spouse's newly eligible dependent was not living in the household with the employee in a parent-child relationship we would not have allowed the child to be added. In your situation no. 2 we would not allow that child to enter our plan based on the information provided. The employee was able to add the child from the beginning whether or not the child was living in his household (our rule for natural children, adopted children, etc.). If the child is the employee's we will cover the child (some exceptions such as married, age, etc.). However, if the child was covered by State medicaid and that was lost by moving then we would allow with proof of loss of coverage.

I think your misunderstanding is due to the fact that employers are given the flexibility to rely on the employee's certification but they do not have to rely on that. An employers 125 plan does not even have to allow a change during the year. My take on this is that since the employee (your spouse) does not have an enrollment form to produce the employer (your employer) has suggested a brief letter from your spouse's employer as documentation. Employers choose their documentation standards.

The qualifying event is the new eligibility for coverage because of the new employment. The date the coverage is effective is relavent and our health plan would require similar information and documentation.

If the self-funded plan has reinsurance for large claims and the plan keeps the retiree on the coverage beyond the provisions in the Plan Document the Plan may find itself fully self-insured as relates to the retiree's coverage. I find reinsurance companies to require more and more documentation regarding eligiblity for coverage when a claim hits specific. I would consider the suggestion to modify the Plan language to accommodate this, and any like situation.

I'm responding as an employer sponsor of a self-billed group term life plan. We keep the records of enrollment and changes on file for each participant. When a group life claim is filed the carrier asks for a copy of the initial enrollment and if there is one, any change of beneficiary forms. If someone phoned me with this question I would refer them to the insurance company that made the benefit payment.

There are no regulations requiring any open enrollments. Also, no regulations restricting the number of open enrollments. The Section 125 Plan Document should state clearly when changes can be made to elections and the underlying health plan rules (see that Plan Document) would dictate when the health plan allows open enrollments.

There is no state tax in TX.

It is my understanding that when the group term insurance is paid for by the employee on a pre-tax basis that "changes it" to an employer paid insurance. In our case that would add it to the group term benefit already being provided for our employees. We have very few employees with less than 50,000 provided by the company, so virtually all the voluntary life would have had to be added to the imputed income calculations currently handled within our payroll system. Just seemed like more trouble than it was worth.

If the employee pays the cost of the coverage with after-tax dollars there is no tax issue. We added voluntary life as a benefit two years ago. This was on top of a very generous company paid group term life policy of 2 times annual to a maximum of $300,000. We chose to offer the voluntary coverage - no underwriting up to a maximum of $500,000 - as an after-tax benefit.

In many cases an employee will attempt to file a statement from a provider instead of a copy of an EOB, receipt, etc. In most cases a billing statement does not include the date of service or the specific service rendered making it impossible to properly consider the claim.

If the voluntary term life is paid for pre-tax it then is considered to be paid by the employer and is taxable to the employee like other employer paid group term life insurance. If the voluntary term life is paid for after-tax then no additional tax is incurred.

Dropping coverage, even in anticipation of a qualifying event such as a divorce, is not a COBRA qualifying event. We do not offer COBRA coverage when an employee drops dependent coverage.

See IRS Rev. Rul. 2002-80, 2002-49 IRB 925

HIPAA provides special enrollment rights to employees when they request enrollment within 30 days of specific events one of which is the loss of other group health coverage. I am not familiar with Multi-Employer or union plans, but do not believe they are excluded from the provisions of HIPAA. Therefore, if she applied for coverage within the stated period of time the plan should allow her to be enrolled. Her prior creditable coverage should prevent her from falling under any pre-existing exclusion of the union plan. With that said, how long does an employee qualify as an eligible employee under the provisions of the union plan when on medical leave? Many plans have limitations regarding eligibility related to leaves of absence.

The Department of Labor's proposed COBRA Model Notice includes the following: Although periodic payments are due on the dates shown above, you will be given a grace period of 30 days to make each periodic payment. Your continuation coverage will be provided for each coverage period as long as payment for that period is made before the end of the grace period for that payment. However, if you pay a periodic payment later than its due date but during its grace period, your coverage under the Plan will be suspended as of the due date and then retroactively reinstated (going back to the due date) when the periodic payment is made. This means that any claim you submit for benefits while your coverage is suspended may be denied and may have to be resubmitted once your coverage is reinstated. If you fail to make a periodic payment before the end of the grace period for that payment you will lose all rights to continuation coverage under the Plan. We have a TPA administering our claims and we send notice of payments to the TPA weekly. Our notice provides the period of coverage paid by the COBRA participant and that information is updated in the claims system. If a claim is received during the grace period, and the payment for the month has not been received, the claim is denied.

Example 5 in the Final Regulations regarding Permitted Election Changes relates to a change in day care provider which is an allowable event to change the day care election. A change in work site may or may not cause the person to move the child to a new day care provider. If the provider was changed then the election could be changed.

FMLA Section 825.212 is the section regarding the consequences of an employee's failure to make timely premium payments.

For most employers and employees a WC leave would also be a qualified FMLA leave and if this is the case the employee's benefits must be maintained. In other words during the 12 weeks of approved FMLA leave the employee should be able to continue coverage at the same rate as an active employee. The employer must notify the employee that the leave will be counted as FML and specifically state how benefits can be maintained; i.e., when premiums are due. While on an FML the employee must be given a notice 15 days prior to cancellation of coverage for non-payment. There would be no reason to have COBRA offered during the 12 week FMLA period. Even if the employee does not pay the employee portion of the premiums and coverage is cancelled for non-payment this is not a qualifying COBRA event.

If I were doing the budgeting I would either use a figure per employee that is reflective of the maximum or possibly the average per person. Turn over and election changes during a calendar year happen in every department. Thus eliminating the need for any department head to know what level of coverage each employee is actually carrying at any given time.

I do not actually pay 125 spending account claims myself, but represent an employer/sponsor of a 125 plan. If I were paying the claims in the first example I would reimburse the allowable amount of $200 and deny the disallowed amount of $35. In the second example I would only pay the requested amount of $47 because it is possible that, instead of a transposition in the figures, the employee is expecting an additional reimbursement from another source.

The law does not mandate coverage.

USERRA gives employees reinstatement rights which include benefits. You can research this further on the DOL web site. If the employee meets USERRA's requirements he is entitled, upon reemployment, to reinstatement in your company's medical and dental plans, as are any previously covered dependents.

If the overage dependent child meets the Plan's definition of an eligible dependent and was not enrolled when initially eligible due to other coverage which has now been lost (due to loss of eligibility for the coverage) HIPAA's special enrollment provision would apply. Open enrollment provisions would also allow a late entrance into the Plan; however, HIPAA does not require open enrollment.