Qualified Status Changes???

[Guest sarikfan]

I have 2 separate situations where employees are wanting to add coverage for dependents due to "events" that do not seem to be clearly defined as qualified status changes. If anyone has handled similar situations, would sure appreciate your viewpoints!

1. An employee/health plan participant's covered spouse has just learned that he has a biological 13 year old son and has received an order to provide health insurance. There is no QMCSO (and we aren't the father's employer, anyway). Our plan definition of dependent is very generous and includes stepchildren regardless of where they live, and even step children of spouses and of domestic partners. It seems that the determination of paternity is "equivalent" to "birth" or "adoption" and should allow for adding a dependent's coverage, but can't find anything about it. Ideas? There is a court order to provide health insurance, but as mentioned before, it isn't a QMCSO.

2. An employee/health plan participant has just received custody of his daughter. She has relocated to his state of residence to live with him. When she lived with her mother, she received medical care from a free clinic and was not covered under our employee's health care coverage or any other group plan. In the state where our employee lives, we only offer one health plan option--our national plan--so by moving to a new state, the dependent did not gain any new options for coverage. The child's relocation itself did not result in the loss of prior "group heath plan" coverage, but she did lose access to the services at the free clinic due to geographical relocation. Again, looking at this practically, it seems that there should be an eligible event here, but I can't find support for it. Any suggestions are most welcome!

THANKS!

[Guest bmaverick2]

For situation 1:

Why is it not a QMCSO? can it be modified to be? Does the employee contest this obligation?

Situation 2

Was the daughter a dependent on workers tax return before having custody of her. If not it appears that the participant would have qualifying event for change in number of dependents.

[papogi]

As for the first situation, this seems to be a function largely of the plan doc. If the plan doc defines this person as a dependent, they should be able to be added within the normal time frame specified in the doc for adding newly acquired dependents.

The second situation I think would constitute a loss of eligibility for the current coverage. In example 4 under ©(4), they use a change in worksite as a change in status and allow a change from one HMO to another. While this does not specifically address a situation such as yours, I think it is the intent of the IRS to allow changes which allow participants to fairly utilize their coverage. I doubt that the IRS would require that a participant drive many miles to another state to the clinic for services. I think you have a status change here, but I’m using an uncharacteristically relaxed interpretation of the regs to arrive at that. Whether or not the dependent is a dependent on the employee’s tax return shouldn’t matter. What matters is the plan’s definition of dependent. If the plan has always seen this person as a dependent (I think it has), albeit not enrolled, then there is no increase in the number of dependents here. The employee might not get the exemption, but they can still put the dependent on their medical coverage if the plan says they’re eligible, as long as a status change has occurred. Sure, some plans are written such that it follows IRS rules for exemption eligibility, but this plan appears to be much more generous as far as dependent definition.

[Sandra Pearce]

In our health plan we have had a situation similar to your situation no. 1. We considered the documentation provided by the employee's spouse and the circumstances and treated it as we would a "birth." However, in our case the newly eligible dependent was also newly living with the employee and spouse. If the spouse's newly eligible dependent was not living in the household with the employee in a parent-child relationship we would not have allowed the child to be added.

In your situation no. 2 we would not allow that child to enter our plan based on the information provided. The employee was able to add the child from the beginning whether or not the child was living in his household (our rule for natural children, adopted children, etc.). If the child is the employee's we will cover the child (some exceptions such as married, age, etc.). However, if the child was covered by State medicaid and that was lost by moving then we would allow with proof of loss of coverage.