Dental enrollment restriction

[Guest Carolyn Barnard]

I just discovered that my client's dental insurance only allows enrollment upon meeting initial eligibility requirements. If they don't enroll when first eligible, they may not later enroll, even on account of a family status change. My first impulse is to say that this benefit would not be eligible to be included in their cafeteria plan. Is this one-time enrollment permissable?

[Jbentz]

Does a dental plan not qualify under the HIPAA speical enrollment requirments? A dental plan is a group health plan, correct? Do they honor these requirments?

[Guest Carolyn Barnard]

They should be honoring HIPAA special enrollment rights...that's a whole other issue. Right now, I'm just concerned that the premiums for the dental are being deducted pre-tax, and that maybe this shouldn't be allowed through a cafeteria plan since failure to enroll initially results in a permanent loss of eligibility. I would think that might also pose problems with nondiscrimination testing.

[Moe Howard]

Carol, it is perfectly OK for an employer to prevent certain employees from participating in fully insured medical coverage. In your situation, the employer says that anyone who did not enroll by a certain date, will never be allowed to have coverage. This violates no IRS nor DOL rules.

For those select (lucky) employees that are allowed dental coverage by the employer, those that meet the employer's odd-ball (but perfectly legal) rule of being allowed coverage because they enrolled by a certain date, they most certainly may pay their dental premiums on a pre-tax basis.

[Guest Carolyn Barnard]

Moe, thanks for the info. I knew that the employer could exclude certain ee's from participation on fully insured benefits...I just wasn't sure that was the same thing as excluding any eligible ee from participation after waiving it initially. They should, however (as Jbentz noted above), be allowing enrollment due to HIPAA special enrollment rights, correct?

[Moe Howard]

What special HIPPA enrollment rights are you thinking of? I don't know of any HIPPA rights that will change things.

[Guest Carolyn Barnard]

Group health insurance plans that are subject to HIPAA (over 50 participants and not excepted benefits under HIPAA) must provide special enrollment periods for certain individuals. "Simply stated, there are two types of special enrollment rights: one for loss of other group health plan coverage, and one for acquisition of a new dependent." (EBIA Cafeteria Plans manual) Usually, the cafeteria plan document will include a reference to IRC Section 9801(f) under its change in status section.

Thanks for your help, Moe. I have since determined that this plan is under 50 participants and self-administered, so would not be subject to the HIPAA rights above.

[Moe Howard]

Carol, the HIIPA rules you quote only apply to those employee's that have the group coverage. Those rules do not force an employer to allow an employee to have the group coverage.