Mid-year health plan changes must be consistent with qualifying event

Posted September 19, 2017

By Ed Zalewski, PHR, editor, J. J. Keller & Associates

Certain life events (such as marriage, divorce, or the birth of a child) allow employees to change their health plan elections under a cafeteria plan outside of the annual open enrollment period. Employees may not, however, make any plan change they want. The requested change must be consistent with the event that triggered the special enrollment opportunity. This is known as the consistency rule.

For example, if an employee gets divorced, he could not drop his own coverage because that would not be consistent with the change in marital status.

The following examples help illustrate the consistency rule.

Marriage

Martina elects employee-only coverage under her employer's plan. During the plan year, she gets married to Rodrigo. Rodrigo's employer offers health coverage, and prior to the marriage, he had also elected employee-only coverage.

After the marriage, Martina may elect family health coverage under her employer's plan, or she may cancel coverage if Rodrigo elects family coverage under his employer's plan. Thus, Martina's employer may permit her to either choose a family plan to add Rodrigo, or cancel coverage to join Rodrigo's plan.

Dependent

Cathy, a single parent, elects a family plan to cover herself and her 25-year old child, Diana. During the year, Diana reaches age 26 and is no longer an eligible dependent under the plan. Cathy wants to revoke her election for family health coverage and obtain employee-only coverage.

Diana's loss of eligibility for coverage is a change in status, and Cathy's request for employee-only coverage corresponds with the change, so it would satisfy the consistency rule. Cathy could not, however, drop her own coverage.

Divorce

Brandon and Alexis are married with one child, Faith. Brandon's employer allows employees to elect employee-only coverage, employee-plus-one-dependent coverage, or family coverage. Brandon elected family coverage.

During the year, Brandon and Alexis divorce, so Alexis loses eligibility under the plan. Their daughter Faith does not lose eligibility, however.

Brandon could cancel coverage for Alexis, and might be able to cancel Faith's coverage. He could change to employee-plus-one-dependent coverage for himself and Faith. Alternatively, if Alexis elects a change to cover Faith under her employer's plan, Brandon could elect employee-only coverage.

About the author:

Ed Zalewski is a certified Professional in Human Resources and an editor at J. J. Keller & Associates, a nationally recognized compliance resource company that offers products and services to address the range of responsibilities held by human resources and corporate professionals. Zalewski specializes in employment law topics such as the Fair Labor Standards Act, employee benefits, and discrimination and harassment. He is the author of J. J. Keller’s FLSA Essentials guidance manual and BottomLine Benefits & Compensation newsletter. For more information, visit www.jjkeller.com/hr and www.jjkellerlibrary.com.