Changing eligibility

[Guest chris4013]

A plan wants to change their 0 service requirement to 1 year. Would only non-participants be affected? What about an employee that was approaching the entry date, would he now be subject to the new 1 year wait?

[R. Butler]

Unless you grandfather them in even current participants may be affected. Likewise, unless you grandfather them in non-participants will be subject to the new requirements.

[Guest chris4013]

To rephrase my question -

Can a plan amend to a higher servie, and subsequently throw participants out?

If not, then can they amend the plan to make employees who met the previous service (and are just waiting for the entry date) to wait for a longer service requirement?

[JanetM]

You can't amend and "throw out" anyone already in. If you had date of hire entry and you amend for 1 year effective 7/1/03 (for example) - anyone hired up to and until 6/30/03 would be in the day of hire. Anyone hired on or after 7/1/03 would have to wait one year.

[Mike Preston]

It depends on your definition of "throw out". You most assuredly can modify a plan so that certain participants are no longer eligible for future benefits. If that is your definition of "throw out", go ahead and "throw them out." However, in and of itself, that doesn't mean that existing benefits (or benefits that people have become entitled to before being "thrown out") can be reduced or eliminated. Consider it as having the same impact as when an employee voluntarily changes jobs to a classification no longer covered by the plan. In and of itself, that is not anything that impacts their existing benefits.

[Guest chris4013]

one last question. Let's suppose the plan has 0 service requirement, monthly entry. An ee is hired 6/02. Can they amend the plan on 6/15 to add a 1 year wait, making the ee, who met the existing service requirement, now wait 1 year?

[Mike Preston]

Yes. There is a fairly well known court case where just this thing happened not once, but twice! THe plan sponsor amended the plan's eligibility criteria just before the individual was to enter the plan. Maybe somebody else knows the citation off the top of their head.

[Kirk Maldonado]

McGath v. AutoBody North Shore, 7 F3d 665 (7th Cir. 1993) [17 EBC 1804].