Family Status Change or Qualifying Event

[Guest EmmaJayne]

Please help, Anyone know where I can find a listing of status changes (what the law considers)? I remember seeing somewhere, a while back that an "increase in premium" to the employee would constitute for a status change..? Sounds sort of odd - but I know I read that somewhere. Where could I find a listing of what the law regulates as a qualifying event for a status change in Health or Dental Insurance. Any help would be greatly appreciated.

[Guest kclark]

The actual Federal Regulation is Prop. Treas. Reg. 1.125-2 in the Q&A it is Q-6(B)(1) Significant cost or coverage changes -(1) Cost changes.

This regulation states that a participant may revoke existing elections and make a new election under a cafeteria plan if the cost of a health plan provided by an independent, third party provider under a cafeteria plan increases or decreases during a plan year and under the terms of the cafeteria plan, employee are required to make a corresponding change in their premium payments. It also states that the premium amount significantly increases, a cafeteria plan may permit participants either to make a corresponding change in their premium payments or to revoke their elections.

The still "gray" area is what actually denotes a "significant" increase in cost. At this time there has been no specific definition for this in the regulations. I think that is something that is at the discretion of the individual employer.

Hope that helps.

[JWK]

One caveat to KClark's answer.

The regulation KClark cited states that the plan may permit participants to revoke their elections "and, in lieu thereof, to receive on a prospective basis, coverage under another health plan with similar coverage." It then says no other revocations are permitted.

Therefore, a plan may allow a participant to elect different coverage but cannot allow a "no coverage" election after a plan year starts on the basis of a significant premium increase.