Back up documentation for Hardship Distribution

[Guest Jnnnwmn]

Does the documentation for proof of a medical hardship withdrawal have to in one certain form? A plan administrator says the backup documentaion must be in the form of the insurancy EOB - she will not accept statements from the hospital, doctors, ect. which show what is due from the patient after insurance. Her reasoning is that she has to have "consistent administrative policies" for the audit.

[Jbentz]

I understand that she needs to be consistent, but you have to be realistic also. I have had many plans that are "paperless" for the insurer and do not send EOBs. I have a plan like that now. I only recieve a letter if a request for coverage has been denied. In fact, i don't think i have recieved an EOB from my medical insurance carrier in over 10 years.

[Guest F1fan]

There is no regulatory requirement that proof of a medical hardship be an EOB. As someone who assists in the administration of hardship withdrawals for my employer’s 401(k) plan, we are looking for documentation that confirms the hardship. In the case of medical expenses, we routinely accept invoices from hospitals, doctors, or other medical service providers. These typically indicate if any of the services have been covered by insurance. We like to think we have consistent administrative policies, but it does not make us a slave to one form of proof.

With regard to requiring an EOB, what if the participant (or the participant’s dependent) is not covered by insurance at all? In that case, there obviously would not be an EOB. Presumably this results in automatic denial? Seems quite harsh to me, although that is obviously a personal opinion.

[E as in ERISA]

My FSA always required a copy of the EOB to prove that the medical claims weren't covered by insurance. For items that weren't covered by the medical plan (e.g., eyeglasses), no EOB was required.