Status Event Question

[Guest GClifford]

We have an 8/1-8/1 plan year with a 7/1-7/15 annual enrollment period. We have a situation where employees want to be covered by their spouse during the spouse's open enrollment period (Oct, for example, for a 1/1 effective date), and then want to cancel coverage with us prior to open enrollment. Our interpretation of the regs is that this is not a valid status change and we have denied the changes. Has anyone else had this occur and have used a different interpretation?

[KIP KRAUS]

Each plan that I have been envolved in, including our current plan, allows an employee to cancel our plan during his/her spouse's open enrollment period. Therefore, if an employee's spouse's OE is July 1 as apposed to our December 1, we will allow him/her to swithc to the spouse's plan July 1.

[SLuskin]

We have just checked with the IRS on this very issue. This is absolutely not a family status change, and the employee cannot be permitted to change. If it were the first time the spouse were eligible for health insurance, yes, that qualifies. Otherwise, it does not. It is one of the most unfortunate aspects of the POP plan and one of the only true negatives.

[KIP KRAUS]

SLuskin:

Has the IRS issued an interprative Bulliten or Opionion Letter regarding this subject? If not, my inclination is to continue to allow employees to make such changes, because it is to our advantage to have employees opt out of our medical plan.

What if the other employer does not allow our employee to enroll in their plan during our open enrollment? I don't think open enrollment is considered a change in family status, is it? Any additional information on this subject would be appreciated.