Sandra Pearce

If there is no additional cost for this additional dependent, it is an eligibility issue only for the health plan.

There are colleges that have low cost health insurance available to the students, and these coverages are not limited to care at a school clinic. It is possible that the child has lost coverage due to eligibility for coverage (not in school for the summer). I would ask the parent to provide documentation of the prior coverage and loss of coverage.

It would seem to me that if the surcharge related to a spouse having other coverage available and that changed then the surcharge could be stopped. However, the plan could certainly limit when that changes could be made. The answer should be found in the plan document and/or the SPD.

I'm curious where you are located. We have employees across the country and I have only run across this one other time, in the state of Washington. Since there is no specific service rendered I don't see how this could be paid either by a health plan or through a spending account.

I can't think of anything in the regulations that would prevent you from having a waiting period for late entrants (other than special enrollments as stated in the regulations). The plan would still be more generous than the regulations require. The 18 month pre-ex would have to run, as you indicated, concurrently with the waiting period established.

Forgetting the issue of the Section 125 plan (although if the company has spending accounts they probably also have a premium conversion option as well) the plan would have to allow late entrants when the late entrant meets the HIPAA special enrollment requirements. Why don't you just amend the plan to strictly adhere to the HIPAA required special enrollments without adding an open enrollment period and shut down all other late enrollees. This is how our health plan operates. We chose to adhere to the most strict interpretation of the HIPAA regulations as relates to late entrants.

I'm not sure if I totally understand the question. My interpretation is that the employee's health plan charges a higher rate for family coverage when the dependent spouse has coverage available through the spouse's employer but chooses to waive that coverage. Then the dependent spouse changes jobs and the new job does not have health coverage available, and your employee wants to have the additional fee stopped (the charge for family coverage reduced to eliminate the additional fee). If I am understanding the question and there is nothing in the health plan document to probibit the change in the charge during a plan year, I believe in the Section 125 rules this would be allowable as a permitted election change related to automatic cost of coverage change. The section reads, "If the cost of a qualified benefits plan increases (or decreases) during a period of coverage and, under the terms of the plan, employees are required to make a corresponding change in their payments, the cafeteria plan may, on a reasonable and consistent basis, automatically make a prospective increase (or decrease) in affected employees' elective contributions for the plan. "

The COBRA regulations provide that 1) the QB must be disabled at the time of the qualifying event or within the first 60 days of COBRA coverage, 2) the QB has a disability determination from the Social Security Administration stipulating to the disability at any time prior to or during the first 60 days of COBRA coverage, and 3)the disability determination is provided to the plan administrator within 60 days of when it is issued by SSA and before the end of the original 18 month COBRA period. If we had a former employee who had not received a determination for the proper period prior to the end of the 18 month continuation period we would terminate coverage at the end of the 18 month period.

I'm not a tax expert but I do know that when an employer provides and pays for the disability insurance the disability benefit received by the employee is then taxable to the employee. This includes an instance when the employee pays for the insurance on a pre-tax basis. When the employee pays with after tax dollars for the insurance the benefit is not taxable.

FAS 106 requires stock held companies to record on their books the value of retiree benefit obligations actuarially calculated based on work force demographics and retiree benefits provided. I am not an actuary but I do gather and present the data necessary to our actuary for calculation our company's reporting obligation.

I probably haven't been clear. Our 125 plan allows for changes annually (if those changes are allowed by the underlying plans). Annually our employees can choose to add a spending account or change their prior election from pre-tax to after tax (or vice versa). If they chose to stop pre-tax election for the health plan they can drop out of the health plan. However, because there is no open enrollment allowed in our health plan they cannot elect to enter the heatlh plan during the 125 enrollment. They could enter the health plan and the 125 plan with a HIPAA qualifying event.

Yes and yes

Just another thought. The health plan does not have to have an open enrollment. By this I mean that the health plan, even operating under a 125 plan, is not required to allow late entrants into the plan in other than HIPAA required circumstances.

Agreed.

The regulations don't actually address partially paid leaves so strict interpretations would mean that you would not allow any change. My reading and understanding of the final regulations and the final regulations incorporating 3/2001 corrections is that changes due to a change in status must meet the consistency rule. I would not allow the change the employee wants.

I'm not sure. Since I don't have them I don't think much about them other than when someone wants to drop coverage due to a spouse's open enrollment period. If each of the family members had elected coverage individually, which they had a right to, would you have put them together as COBRA family coverage or actually given each of them "employee" only COBRA coverage?

I would not think that would meet the consistency rule. If the spouse is on a medical leave it would make logical sense that medical expenses are greater not less.

I'm curious as to what change the employee is trying to make?

Our health plan does not have open enrollments. There are no requirements regarding when someone can drop coverage, other than those imposed on employees who are pre-taxing their premiums through our 125 plan. 125 rules would not apply to my COBRA participants. I would consider the family coverage election to be the same as each of the family members electing coverage and if one or more chose to drop I would allow that.

In our health plan the step-child must live with the employee, the employee or the employee's legal spouse must have legal custody of the step-child and the step-child must reliant upon the employee for support.

I'm no authority, but I've never heard of a third party administrator reimbursing for expenses without proper documentation. Your SPD should address how claims are filed/reimbursed.

Does the employee have some documentation of the child registering for Spring 2002 and then getting the "dismissal?" Or maybe the response to the appeal. I could see using either of those as documentation of loss of coverage.

I've been involved (human resources and payroll) with several 125 plans and have never seen any adjustment made to W-2s. There is a block on the W-2 that shows the dollars taken from the employee for the dependent care account.

Read the Plan Document for the 125 Plan regarding changes. Most plans are written to accept changes prospectively after notification of the family status change by the employee (although some do require that notice to be in a certain number of days after the change in family status). In our plan notice today that the child was ineligible in our health plan would allow us to make the change effective 4/1/2002.

The dependent care spending account would be a Section 125 Plan and would require a plan document, an SPD and a 5500. The parking reimbursement would be a Section 132 plan and would not require a plan document, an SPD or a 5500.