employee's spouse has cheaper insurance-Qualifying Event?

judysanders · January 2013

I have an employee who has family health coverage (self, spouse, 2 children) under our cafeteria plan. the spouse has taken a new job and is being offered health insurance. They want to drop my employee down to single coverage and will then take out family coverage at her new place of employment. I dont feel this is a qualifying event but would like more opinions.

thanks.

sonny · January 2013

The wife, obtaining coverage, is, in my opinion a qualifying event.

anelr · January 2013

I agree with Sonny..It is a qualifying event.

cnghr · January 2013

Agreed that this is a qualifying event...we just had the same thing happen here so it's pretty fresh in my mind!

Dutch2 · January 2013

I also agree. We would and do allow such changes in our plan. This happens occassionally when a spouse gains or looses employment.

FunHRBanker · January 2013

I too concur.

How do you handle spouse's whose renewal dates are different than yours? Say Joe has family coverage through you (your plan renews 1/1). His wife, Sally, has a plan that renews 3/1. Would you allow Joe to change coverage 3/1? I say yes. Otherwise, how would people ever change?

NaeNae55 · January 2013

FunHRBanker: I agree that the spouse qualifying for new coverage makes this employee eligible to change their coverage. However, I disagree with your second comment. My understanding of the regulations includes a significant change in the cost of coverage as a possible qualifying event, but the definition of 'significant' isn't given. What is significant to our employee may not be significant to the IRS and could possibly end in the entire plan being disqualified.

We have only had one employee push for this, and the difference of $20 was significant to them, but not to us. If it had been 25% or more, we might have been willing to risk it. Otherwise, we do not allow.

Perhaps the regs have changed since the last time I looked (and it has been awhile). How do other forumites handle?

FunHRBanker · January 2013

Nae, I get what you're saying. How would anyone ever change plans if their spouse's plan year was different than theirs?

NaeNae55 · January 2013

Employees generally have an idea after the first year whose insurance is going to be better. Then they take the risk and choose one. Sometimes they are right, sometimes they are wrong. But one having a better rate than another is not a qualifying event in my opinion.

Our open enrollment is in October for a January 1 plan year. We try to be flexible for those whose spouses have open enrollment before or after us. For instance, we get our rates out as soon as possible. If we have a high number of employees who haven't got their paperwork in by the deadline (happens frequently), we extend it and accept changes through the extension. But when it is over, it is over. Once OE is closed and unless there are clerical errors, your choices remain throughout the new year unless you have a QE.

ACU Frank · February 2013

I present it as a qualifying event, and if one of the insurance carriers has an issue with it we can address it then. I let everyone know that up front, and only two or three times in the last decade has it been an issue.

Still Need Coffee · February 2013

Becoming eligible for other insurance (state insurance, spouses plan, etc) IS a qualifying event under our plan, regardless of if that insurance is more or less expensive. First I would check your plan docs, but generally, this is a qualifying event.

Sharon McKnight SPHR · February 2013

[quote=judysanders;724812]I have an employee who has family health coverage (self, spouse, 2 children) under our cafeteria plan. the spouse has taken a new job and is being offered health insurance. They want to drop my employee down to single coverage and will then take out family coverage at her new place of employment. I dont feel this is a qualifying event but would like more opinions.

thanks.[/quote]

Hi!

Your first post! Welcome to the Forum. :welcome:

Sharon

rnadeau · February 2013

My understanding is that a qualifying event is one that causes an employee to lose coverage and trigger COBRA. I don't believe an employee having other, less expensive insurance available would be a qualifying event under the traditional definition. I suggest checking the HRLaws website.

NaeNae55 · February 2013

"Change in employment status (for employee, spouse, or employee's dependent) that affects eligibility for health insurance benefits."

This is from fsafeds.com website.

[url]https://www.fsafeds.com/forms/qscfact.pdf[/url]

This IS a qualifying event since the spouse just got new employment and became eligible for other insurance.

Still Need Coffee · February 2013

[QUOTE=rnadeau;724865]My understanding is that a qualifying event is one that causes an employee to lose coverage and trigger COBRA. I don't believe an employee having other, less expensive insurance available would be a qualifying event under the traditional definition. I suggest checking the HRLaws website.[/QUOTE]

Just a point of clarification here, a qualifying event is actually an event that causes the employee to be [B]eligible to make changes [/B]to existing coverage. That change could result in COBRA being triggered, but not always.

Sharon McKnight SPHR · February 2013

[quote=rnadeau;724865]My understanding is that a qualifying event is one that causes an employee to lose coverage and trigger COBRA. I don't believe an employee having other, less expensive insurance available would be a qualifying event under the traditional definition. I suggest checking the HRLaws website.[/quote]

Your first post! Welcome to the Forum. :welcome:

Sharon

Dutch2 · February 2013

I believe most eveyone is in agreement that "dropping coverage just because I don't want it" is not a qualifying event. However dropping because my spouse is in open enrollment and their coverage is better / their premiums are cheeper" can be a qualifying event if your Plan Description states this is allowed. Of course... the reason particpants can not drop coverage at any time is because of the IRS rules - due to the premiums being taken per-taxed. Therefore, their must be a qulifying event to drop coverage.
We had to amend our plan a few years back to allow for the change during the plan year to correspond with a spouses open enrollment.

NaeNae55 · February 2013

The spouse has taken a new job so that makes it a qualifying event regardless of anything else that is being discussed.

Dutch, you surprised me. I have never heard of any case where putting it in your plan allows you to consider spouse Open Enrollments as qualifying events. Did you run this past your attorney? I assume you did because it is a plan amendment and you are a smart HR person. Still, I am just blown away that it would be considered allowable.

Dutch2 · February 2013

That line is straight from the chief compliance officer at the TPA that manages our Group Health Plan. We have a self insured plan if that might make a difference.

arnoldous · July 2013

Being an employee of other company the spouse will definately get this option, which is a qualifying event.
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employee's spouse has cheaper insurance-Qualifying Event?

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