High Deductible Health Plans and Change in Status

[Guest Cgross]

We're developing a High Deductible Health Plan for one of our clients to use with a Health Care Savings Account.

I know that a HDHP can be offered under a Cafeteria Plan, but I have a question about Change in Status rules.

A person may not have an HSA if they are covered under any other plan. The group wants to allow an employee to change from the HDHP to another plan offered by the employer if they become covered under their spouse's plan.

While other coverage is a problem for the HSA, it does not affect the eligibility requirements under the HDHP, and I don't believe it falls under the permissible change in status rules already in place. I think the employee would have to wait to make a plan change at open enrollment.

Any advice would be appreciated.

Thanks.

[papogi]

Treas. Reg. 125-4 allows an employee to make a prospective change under their employer’s plan if the change is on account of and corresponds with a change under another employer’s plan as long as the other plan allows a change permitted under the change of status rules, or the other plan has a different plan year (open enrollment periods do not mirror each other). I’m mostly paraphrasing IRC, but I think your answer is within that section.