Dependents and Family Status Changes

[Guest mls]

We have two issues we need some help with.

1. Dependent was cancelled from our pre-tax medical plan because he was not enrolled in school. Now the dep is back in school and parent wants to enroll him. We can't find reason under Section 125 (e.g. he is not a "newly" eligible dep.") to allow him to enroll now. We are thinking that the dep can be enrolled during open enrollment.

2. We have a dependent who turned 18 and moved out on his own. His parent's want to drop his coverage. Our plan states that you may cover "an unmarried child under the age of 19." We are wondering if the parent can drop the dep simply because the dep no longer lives with them. Or, do they have to wait until open enrollment.

[Guest BENEFISH]

mls, if the dependent in issue #1 lost eligibility because he was no longer in school, it seems to me he regained his eligibility when he reenrolled; thus, newly eligible. Unless your plan document does not permit reenrollment except during open enrollment, why not let him enroll in the health plan? He should know that he is likely a "late" enrollee and possibly subject to a longer period for pre-existing condition exclusion. Again, your document will answer this.

Issue #2, if your definition of "dependent" includes a requirement that they also qualify as a dependent under IRC Section 152, your employee may not have any choice but to drop them. If your document does not mention such a requirement, you will have to determine on your own whether they continue to qualify. If the rebel is now on his own, is he employed? Does he have other coverage? You may be able to take advantage of COB provisions of your plan. Also, depending on your interpretation of dependent status under your plan and its relevance to loss of coverage for the dependent in question, don't forget to send COBRA notices.

Maybe I'll see you at the NEBI Fall Legislative Conference in Washington tomorrow and Wednesday!

[Guest ScottN]

I totally agree with Benefish on issue #1. On #2, if the plan is contributory (yours may not be) for dependents, does'nt the employee have the right to drop this dependent's coverage at their discretion?

[Guest mls]

Scott N - Since our plan is pre-tax, we don't allow participants to drop dependents unless there has been a valid family status change.