Spouse Not Covered on Marriage Date?

[Guest Diana Daffner]

Section 125 rules say that only for birth/adoption can new coverage be permitted retroactively. This means that a spouse cannot be covered as of the marriage date UNLESS enrollment takes place BEFORE that date.

However, most plan material still uses the 30 or 31 day rule (enroll within 30 days after marriage, coverage is effective as of date of marriage.)

Has anyone changed their administrative documentation or employee communication to address this? How are you handling it?

[KIP KRAUS]

If you are referring to group insurance plans or self-insured group plans I have never seen these plans enroll new spouses in the plans on a retroactive basis. It is true that most of these plans require a new dependent to enroll within 30-31 days of becoming eligible, but coverage only starts on the date of enrollment subject to any other plan restrictions. However, I have seen medical and dental plans that cover a new born at birth provided the employee has family coverage.

[Mary C]

We are a large (over 100,000 employees), nationwide company who have always enrolled new spouses as of the date of the marriage if the forms to enroll them are completed within 31 days. Because forms are usually not completed till after the marriage, the enrollments are by necessity retroactive. In addition, I checked the certificate of coverage from a few of our larges HMO's and they state that, too. Can you give me the site that says we are not permitted to do this?

[KIP KRAUS]

Marry C:

There is no site for what I have seen as the norm. It just happens to be an underwriting option. If your plan is as large as you say it is then you know you can pretty much design it the way you want and if it allows new spouses to be covered on the date of marriege that's fine.

I guess I shouldn't have really said that what I've seen is always the norm, because I have seen it done your plan's way.

[Guest Diana Daffner]

Mary C:

I called the IRS office that issued the Section 125 final regs, and the interpretation given to me was that new enrollment due to marriage had to be prospective, not retroactive.

The number is (202) 622-6080 and is on the documentation at

http://www.benefitslink.com/taxregs/1.125-4.shtml

The IRS lawyer said that cafeteria plans that allowed retroactive enrollment probably would not be disqualified but that they were not following the law.

The IRS is planning to issue clarifications "soon after the beginning of the year".

If you find more or contrary information, please post again. As you state, many plans offer coverage as of the date of the qualifying status change event, as long as enrollment is made within 30/31 days afterward. This interpretaion will cause widespread chaos and gaps in coverage.