Question re: forced family coverage for alternative welfare plans

[Guest kylaw]

Please be gentle, non-benefits attorney dabbling at the company's insistence.

We have a self insured self administered health plan and a third party insured optional dental and vision plan. Three tiers are offered, employee, employee+1, and family.

Existing company policy is that if you have family medical, you MUST take family dental or family vision when electing them -- you cannot have family medical and single or employee+1 dental or vision coverage.

Regime change we're considering changing this rule. Any legal requirement that these coverages be mirrored completely?

Thanks in advance!

Kylaw

[mroberts]

There's nothing illegal about how the employer is currently administering the plan. The employer is offering the insurances as a "bundled" product. Therefore, if you elect one, you elect all of them. Most employers take the unbundled approach. 95% of the time employees will make the same election for dental and vision as medical unless the employer doesn't contribute much to those coverages.

[Guest asire2002]

I assume you won't rely on responses you receive, but only use them as a guide toward finding the right answers.

There is no legal reason why you could not make the change you are contemplating. But there may be practical reasons why you might decide not to make that change, e.g., there may be issues of adverse selection if you allow the dental/vision choice to be separate from the medical choice. You should review the dental/vision policy and contract to make sure there is no contractual restriction on flexibility.

These plans are covered by ERISA. You'll have to notify participants and beneficiaries of the change within the time required under ERISA. Untying the knot between the different benefits may also have implications from a COBRA administration perspective -- if you are currently treating medical/dental/vision as one big plan for COBRA purposes (are you filing 3 5500s or only 1?) you should look at whether you are creating 2 or 3 plans now for which separate COBRA notices might be required.

[Guest kylaw]

Thank you both. This board was definitely my starting point, not an end point. Our benefits director has been away dealing with a family emergency, and I just wanted to gather some information to see if it was even worth pursuing on her return. Thanks for steering me in the right direction.