ADOPTION OF A SPECIAL CHILD

Ethel · February 2005

Sorry this is long, but unique situation so please bear with me (and give me any info or advice you can!!!!)

Employee adopted a special child and part of the adoption agreement was that healthcare would be provided by the state. All went well for several years and then a few months back, they received a form notice that child would no longer be provided healthcare coverage. Employee asked to add child in our plan and we allowed it. They also protested coverage denial to the state. They just received a notice that child had state coverage effective 2/1/05. He now wishes to drop her from our plan -- I checked with SHRM and they said it is ok to drop. Our consultants say no, that IRS has specifically ruled against this situation -- (i.e. ok to let them sign up, but cannot do mid-year drop ) HELP!!!

Can anyone help me?????????

Geno · February 2005

[font size="1" color="#FF0000"]LAST EDITED ON 02-09-05 AT 04:13PM (CST)[/font][br][br]Hello Ethel,

Who or from where did you get the notion that you could not make amendments (we call them "drops" and "adds" and we do it all of the time) to your list of healthcare insurance enrollees. With other coverage in place and with the custodial parent/employee being the one requesting the cessation of coverage from your plan, than what's the big deal? What is the rational for not being able to drop an insured from coverage? What do you do with employees who resign or get terminated? I've heard of special rules for adding people outside of an open-enrollment period but never for dropping them. Do yourself a favor and call your health care insurance company -- it's their rules that will prevail in the end, not mine or anyone else's opinion.

Geno

Ethel · February 2005

I should have included that this is part of a section 125 plan and when you can or cannot drop is regulated. Terminations, resignations, life syle change, marriage, divorce so forth are permitted to be dropped or added.

Down_the_Middle · February 2005

At the risk of responding w/o asking a zillion more questions, I believe what you experienced (child now has state offered coverage) is clearly a qualifying event and warrants the employee coverage change ----------- a court decree establishing an employee's responsibility for child coverage is a bona-fide event.

Down_the_Middle · February 2005

Geno's response just arrived on my PC and IF his add/drop examples are governed by IRS qualifying events, then I sort of agree. IF he's suggesting that the plan can add or drop at the employer's discretion, that my be permissable if there's no pre-tax component. IF there is a section 125 POP type of plan, then the employer's ability to add/drop as he suggests is not as easy as it's portrayed.
Maybe I misinterpreted Geno's intended response...

Ethel · February 2005

kind of complicated, but the state was decreed to have responsibility for coverage. There was a "screw-up" and the coverage was cancelled.

Don D · February 2005

I will only add that neither SHRM nor your consultant have anything to offer other than their opinion. Neither is in a position to issue a ruling.

Geno · February 2005

Question for Ethel

Ethel, I thought about your question last evening and while you didn't mention the word, I was wondering if all the angst surrounding your issue was because of some COBRA concern?

To Down-the-Middle

Good question, and yes, all of our healthcare coverage insurance coverage amendments (drops and adds) are processed with all due diligence being given to our COBRA obligations. It's even more challenging for us in that we act, (as I'm sure others do) as our own plan administrator.

Geno

Ethel · February 2005

TO GENO -

The "angst" is that when the other coverage was cancelled, the employee asked if he could add the child and then delete her if his appeal was granted and coverage was re-instated. My interpretation was that yes he could and I told him so. He now is most anxious to cancel because it will significantly lower his premium. I have posed the question to my insurance provider, but they always have to send questions to "Legal" and that can take some time.

With 20-20 hindsight, I now know I should have checked BEFORE I spoke. Oh well.............

lorrie · February 2005

I have struggled to interpret the change in circumstance guidelines of Section 125 plans also. My understanding is that this WOULD be considered a change in circumstance, and the employee should be able to drop the child from the company plan IF notification was made in a timely manner according to your plan documents.

ADOPTION OF A SPECIAL CHILD

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