Medicaid coverage for dependent as qualiying life event

[Guest MELIWRI]

We have an employee who has four children. One child (Child A) has had Medicaid coverage for several years because he has a special health condition. Child A and her other children have been on our company's insured health plan. Her other three children recently became eligible for our state's childrens health insurance program. She now wants to drop all of her children from our company's health plan and switch from family coverage to single coverage.

From our research, we see that losing or gaining coverage in this type of program is a qualifying event. Our question is whether it is a qualifying event for all the children since only three of the four recently became eligible for SCHIP. Our employee service company took the position that it was not a qualifying event because one child did not have a change. However, I do not think that is right since dependents are treated as a class. Does the status change of three out of four dependents entitle our employee to drop her dependent coverage?

[Mary C]

I don't think its allowed, but not for the same reason as your TPA. In the preamble to the final regs issued 1/10/2001, it states that they have broadened the definition of other coverage to include any coverage offered by another or same employer, government or educational institution, such as a state program SCHIP. However the next sentence, and the following is lifted directly from the preamble, says:

THE REGULATIONS DO NOT ALLOW A CAFETERIA PLAN PARTICIPANT TO CEASE PARTICIPATION IN A CAFETERIA PLAN IF HE OR SHE BECOMES ELIGIBLE FOR SCHIP COVERAGE DURING THE YEAR BECAUSE OF A CONCERN THAT SUCH A RULE WOULD VIOLATE A FUNDAMENTAL PRINCIPLE OF TITLE XXI OF THE SOCIAL SECURITY ACT THAT SCHIP COVERAGE NOT SUPPLANT EXISTING PUBLIC OR PRIVATE COVERAGE.

Since the other coverage he is using as an event to cancel is SCHIP, and since the above passage says you can't supplant private coverage by SCHIP, I don't think its an event to cancel coverage.