Domestic Partner becomes Spouse, Misses 30-Day Window for Qualified Status Change -- Still Covered?

[Guest GmcyWT]

Employee has a domestic partner who is covered by/enrolled in employer's health plan. Employee subsequently marries his domestic partner, and she becomes his wife. Employee fails to notify employer of the marriage within the plan's 30-day window for qualified status changes. Employee follows up ~45 days after the wedding to request that records be updated to reflect her new married name and to reflect that she is his spouse.

If such change were permitted, it would not result in any change in coverage -- the wife (former domestic partner) was previously covered under the plan. However, this would eliminate the employee's imputed income for coverage of a domestic partner.

This does not appear to be a qualified status change, because the employee missed the 30-day window. However, if the plan does not cover the new wife as a spouse, can it continue to cover her as a domestic partner? Although unclear, it does not appear that she is still considered to be a domestic partner for purposes of coverage under the plan.

In connection with domestic partner coverage, the plan requires certification of domestic partner status. The certification includes a statement that neither the employee nor the domestic partner is legally married to someone else at this time, nor has either one of them been married during the past six months. Although neither the employee nor his new wife has been legally married to "someone else," they would now arguably have been "married during the past six months."

The certification also states that domestic partners are subject to the same 30-day notice requirement for benefits changes that applies to all other employees. If there is any change in status as domestic partners that would make them no longer eligible for benefits, they must notify the employer within 30 days. The certification seems to focus on loss of domestic partner status that would cause loss of benefits eligibility. It does not appear to contemplate a scenario where loss of domestic partner status simultaneously results in benefits eligibility as a spouse.

Is the employee out of luck for making a mid-year change from domestic partner to spousal status? If so, is the employee further out of luck, because his new wife must now be dropped from the plan (not eligible for coverage as spouse, no longer eligible for coverage as domestic partner)?

[QDROphile]

You need to get back to basics to figure out what to do. The status change rules under section 125 address situations that allow an employee to change a salary reduction election, which is otherwise irrevocable for the year. The plan rules often coordinate with the health plan coverage rules, but the concern is the covereage rules. Take a look at what is changing and what is not. A change in ultimate income tax effect is not necessarily something that concerns the section 125 rules or plan coverage rules.

[masteff]

Which is also to say: the imputed income rules exist in a different part of the Code from the change in status rules.