Change in Status -- Dependent Care

[Guest RW]

Please comment on whether this example scenario makes sense: Employee marries at the beginning of year, after the open enrollment period. Employee wants to enroll dependents (who are step children) on to the Flex Dependent Care account.

Dependent Care SPD states that only decreases in coverage may be made for a change in status. In other words, no enrollment until the next open enrollment period.

I realize that companies are permitted to make rules that are more restrictive than the IRS regulations on change in status, but this SPD provision is insensible. It practically means that any new dependents must wait until the open enrollment period, unless one had the foresight to sign up for some Flex coverage, and then change the amount under change in a status event. (In this case the formerly single employee was not even eligible to sign up for dependent care because he did not have any dependents during open enrollment!) Perhaps the company doesn't want the administrative burden of tracking mid-year elections? (But, the company must track those who leave mid-year.)

Is the company miscontruing the cafeteria rules (perhaps thinking of health care Flex instead??)? Comments? What does your company do? :confused:

[Guest Matt J]

It sounds like this is going against the Consistency rule. Generally when you are adding dependents, you should be allowed to increase the DCRA election due to the new "burden".

I believe the Consistency rule is stated that participants may make changes to their election "on account of and corresponding with a change in status that affects eligibility for coverage." This means that a change in status must have occurred. i.e. Marriage. Secondly, the change in election must be "consistent with the reason that such a change was permitted," in this case, increasing/decreasing coverage due to the marriage.

But, the Plan Document will rule regardless.

[mroberts]

It could simply be a mistake in the SPD. I previously did contracts for North America's largest insurance carrier, and let me tell you, some people just don't care. I would say contracts are wrong 95% of the time they go out the door by whoever is preparing them. It's sad, but true.

I would contact the administrator and see if this can be revised since it seems to be pretty obvious that something was left out.

Take Care!