by Lexi Garcia | Jul 11, 2024 | Blog
When it comes to health insurance coverage, understanding special enrollment rights is crucial. In this article, we’ll explore the scenario where an employee previously dropped group health coverage due to obtaining other coverage but subsequently loses that other coverage. Let’s dive in!
What Are Special Enrollment Rights? Special enrollment rights are provisions that allow eligible employees and their dependents to enroll in a group health plan outside of the regular enrollment period. These rights are triggered by specific life events, such as losing other health coverage.
The Scenario: Employee Drops Coverage and Subsequently Loses Other Coverage Imagine an employee who initially enrolled in their company’s group health plan but later dropped the coverage after obtaining other group health coverage through their spouse’s new employer. Now, the spouse’s employment has terminated, and both of them are losing their coverage. Does this situation trigger special enrollment rights under the plan?
HIPAA Requirements: Loss of Eligibility and Other Triggers Under the Health Insurance Portability and Accountability Act (HIPAA), group health plans must provide special enrollment opportunities in certain situations. These include:
- Loss of Eligibility for Other Coverage: If an employee or dependent had other health coverage when enrollment was offered and declined, losing that coverage can trigger special enrollment rights.
- Termination of Employment: Even if an employee didn’t elect COBRA coverage, they still retain their special enrollment right if they lose eligibility due to termination of employment.
Applying Special Enrollment Rights in This Case: In our view, the employee’s circumstance qualifies for special enrollment rights. Here’s why:
- The employee was previously offered coverage but declined it when other health coverage was in place.
- Dropping coverage after enrollment doesn’t change the underlying reason—the existence of other coverage.
Conclusion: Re-Entering the Plan Midyear Given the situation, the special enrollment right for loss of other coverage should apply. Both the employee and their spouse can re-enter the group health plan midyear. Employers should ensure clear communication about these rights to support their employees during critical life events.
Remember, understanding special enrollment rights empowers employees and ensures comprehensive health coverage.
Source: Thomson Reuters
by Lexi Garcia | May 23, 2024 | Blog
Understanding cafeteria plan election changes can be complex, especially when dealing with domestic partner relationships. Here’s what you need to know about whether such relationships qualify for election changes under cafeteria plan rules.
Domestic Partner Relationship and Election Changes
The commencement of a domestic partner relationship does not qualify as a “change in marital status” under cafeteria plan rules. Legal marital status changes include marriage, death of a spouse, divorce, legal separation, and annulment. While the list is not exhaustive, the IRS does not recognize the start or end of a domestic partner relationship as equivalent to these events.
Alternative Election Change Event: Change in Coverage Under Another Employer Plan
However, another permitted event, “change in coverage under another employer plan,” may allow for an election change. If your plan includes this provision, your employee can drop major medical coverage upon becoming covered under their partner’s employer plan. This event does not restrict changes to the plans maintained by the employer of a spouse or dependent but does not allow changes to health FSA elections.
Key Takeaways
- Domestic Partner Relationship: Does not qualify as a change in marital status for election changes.
- Change in Coverage: Employees can change their election if covered under a partner’s employer plan.
- Documentation: Required to prove new coverage under the partner’s employer plan.
- Plan Specifics: Check your specific cafeteria plan terms for detailed rules and procedures.
Conclusion
While domestic partner relationships don’t qualify for election changes under marital status rules, a change in coverage under another employer plan can allow adjustments. Always consult your cafeteria plan specifics and seek professional advice for compliance.
by Lexi Garcia | Jul 27, 2023 | Blog
QUESTION: Our company’s major medical plan offers a choice of self-only or family coverage. Dependent coverage is provided under the family coverage option for participants’ children who have not yet reached age 26. May our plan impose an additional premium surcharge for children who are older than age 18?
ANSWER: A premium surcharge for coverage of children over age 18 is not permitted because your plan would be impermissibly varying the terms for dependent coverage of children based on age. The Affordable Care Act (ACA) requires group health plans that provide dependent coverage of children to make such coverage available for a child until age 26. In addition, the terms and conditions under which dependent coverage is provided for children cannot vary based on age, except for children who are age 26 or older. This rule is known as the “uniformity requirement.”
Although your plan may not impose a surcharge for these children, revising or repricing the plan’s coverage tiers without making the structure age-based may allow your company to accomplish the same financial goals. For example, a plan design in which the cost of coverage increases for tiers with more covered individuals would not violate the ACA’s age 26 mandate, so long as the increase applies without regard to the age of any child. Although you did not specify whether your plan is grandfathered, it is important to note that changing coverage tiers can adversely affect a plan’s status as a grandfathered plan.
Source: Thomson Reuters
by Lexi Garcia | May 4, 2023 | Blog
QUESTION: Next year, we plan to amend our company’s cafeteria plan to add a health FSA under which participants elect a coverage amount for the year and pay for it with pre-tax salary reductions. There will be no employer contributions, so participants’ health FSA salary reductions will equal the elected annual coverage amount. The health FSA will be offered to all employees who are eligible for coverage under our major medical, dental, and vision plans. We know that these other plans must offer continuation coverage under COBRA, but will our health FSA also be subject to COBRA?
ANSWER: Unless maintained by a church, the federal government, or a small employer (all employers maintaining the plan must have employed fewer than 20 employees on a typical business day during the preceding calendar year), health FSAs must offer COBRA coverage to all qualified beneficiaries who lose coverage due to a qualifying event and must provide all required COBRA notices. But health FSAs that meet the following three conditions are permitted to provide COBRA coverage on a more limited basis than other group health plans:
- Maximum Benefit Condition. The maximum benefit payable under the health FSA during a year to any participant cannot exceed two times the participant’s salary reduction election under the health FSA for the year or, if greater, the salary reduction election plus $500. Your health FSA will satisfy this condition because the annual coverage amount equals the annual salary reduction election.
- Availability Condition. Other group health coverage must be available to health FSA participants for the year due to their employment. The other group health coverage must be “major medical” or other coverage that is not limited to excepted benefits (e.g., limited-scope dental or vision coverage). Since all employees eligible for the health FSA will also be eligible for your company’s major medical plan (and assuming that the entry dates for both plans are the same), this condition will be satisfied by plan design.
- COBRA Premium Condition. The maximum premium that may be charged for a year of COBRA coverage under the health FSA must equal or exceed the maximum benefit available under the health FSA for the year. Health FSAs funded entirely with participant contributions generally meet this condition because COBRA premiums must be calculated based on the cost to the plan of providing coverage, and the cost to the plan will generally equal the elected annual coverage amount because employees tend to incur claims nearly equal to their elected coverage amounts.
Most, if not all, health FSAs will qualify for the special limited COBRA obligation, and those that do may limit COBRA coverage in two ways: (1) the maximum COBRA coverage period may terminate at the end of the year in which the qualifying event occurs; and (2) the health FSA is not required to offer COBRA coverage to qualified beneficiaries whose accounts are “overspent” as of the date of the qualifying event. An individual’s account is overspent if the remaining annual limit (the difference between the annual election amount and the reimbursable claims submitted before the date of the qualifying event) is less than or equal to the COBRA premiums that would be required for the remainder of the year.
Source: Thomson Reuters
