Qualified Family Status Change

[Guest CLDEMP]

A newly hired employee failed to enroll in a Sec. 125 cafeteria medical benefit plan within 31-days. He now has reported that his ex-wife has lost her medical plan coverage which results in HIS dependent child losing coverage.

It is my opinion that he is not eligible to enroll at this time since he has not lost coverage. His child lost coverage but is not entitled to our plan coverage without an order from the court.

Anyone agree with this logic?

[papogi]

First off, does your employee have any coverage elsewhere? I'm just wondering why he did not sign up for your coverage. Anyway, you will have to look at your plan's definition of "dependent". This child might live with his/her mother, and may be entirely dependent upon her for support. Your plan doc might state that a child must be dependent upon your employee for support, in which case this child does not satisfy the definition of dependent. HIPAA requires that an employee be able to enroll under a Special Enrollment if either the employee loses coverage elsewhere, or the employee's dependent loses coverage elsewhere (and the dependent initially declined coverage because of other coverage, which is the case here). So, if this child is considered a dependent of the employee under your plan, then the employee and the dependent must be allowed on your plan since the dependent lost coverage. If the child is not a dependent under your plan, then no HIPAA event has occurred, and they can't come on the plan. Keep in mind that we are talking about HIPAA's requirements as they are applied to your underlying group health plan. Your Section 125 plan may or may not allow any status changes (it probably does), so it may end up that this employee and dependent can come on your plan, but must do so with after-tax dollars.

[Guest CLDEMP]

The employee dos not have coverage anywhere else. He admitted that he just failed to enroll within the 31-day enrollment window that is specified in our plan.

The employee didn't decline coverage because it existed elsewhere. He was not covered and our plan requires that employees enroll in coverage for themselves before dependents can be added. Our plan doesn't provide for dependent only coverage so I'm not sure that HIPPA would apply to this scenario.

The child lives with the mother and the father contributes to the support. Our plan document does include "support" language in the definition and also states the employee must be the guardian of the dependent.

A qualified status change must satisfy the consistency rules and I don't think we would since the employee did not lose coverage.

[papogi]

It does not matter that your plan does not provide for dependent only coverage. An employee can decline your coverage because he doesn't want it, but if one of his eligible dependents loses coverage elsewhere, this is a HIPAA event which would allow both the employee and the dependent to come on your plan. Since the mother seems to be the guardian, the mother probably takes the dependent exemption, so the child does not satisfy your plan's definition of dependent. Since the HIPAA rule explained above applies only to eligible dependents, this is a moot point.