Health insurance - Change in family status

GLC

When have an employee who wants to add her husband to our health insurance because there has been a recent increase in his health insurance cost from his employer. Our open enrollment is August of each year. I want to know if this qualifies as a change in family status under Section 125 cafeteria plan. I live in Kentucky.

Scott Ruth

It may qualify. First, the husband's employer's plan must allow him to drop coverage as a result of the increase in cost. If that coverage is offered through a 125 plan, in order to be able to drop the coverage IRS rules require that the cost change must be significant, there not be an alterantive coverage option available under the plan, and the plan be written to allow the change.

If the husband can drop his health coverage, IRS rules will allow him to be added to coverage under your 125 plan, so long as your 125 plan is written to recognize a change in coverage under another employer plan as a family status change. If it does, make sure you follow the terms of your plan in making the family status change.

Scott Ruth
Miller & Martin LLP

Mikki H

I think there might be two issues to consider, whether your insurance policy will allow to add outside the open enrollment and whether it would qualify to be added in your 125 Plan.

I know with our current insurance policy, they do not consider the increase in premium as an event to allow adding dependents. It must be an "involuntary" loss of coverage and the fact the premiums are increasing is not involuntary, but a choice. I have not seen anything about a significant increase as mentioned above, but this information comes from our insurance company so maybe they are reluctant to tell us.

DeniseR

He he just went through an open enrolment and at this time they told him that the premium will be increased, then yes, he qualifies for a special enrollment because he just underwent an open enrollment and at this time he could drop his current coverage and get on yours under a special enrollment. Hopew this helps.
Denise Robinson
Asst HR Manager
Woodcliff Lake, NJ