Our client’s employee who has family coverage wants to drop his insurance because it is not covering certain prescription drugs for his dependent child. His wife begins work for the same employer on June 27. She is gaining coverage based on a change in employment status and could elect family coverage or spouse plus child if they have it. The employer’s plan states “Employee may revoke or decrease election under employee’s, spouse’s, or dependent’s coverage if employee, spouse, or dependent is added to spouse’s or dependent’s plan; coverage option (e.g., HMO to PPO) change may be made.”
Would it be a qualifying life event for him (spouse gains employment and becomes eligible) to drop his family coverage and then his wife pick up coverage for just the two spouses? Could he just drop coverage?
The situation you describe is one of the permitted mid-year election change events allowed (but not required) by the IRS regulations. This type of event is usually referred to as a “change in coverage under another employer plan.” It appears from the text you included in your email that the client’s plan allows participants to make mid-year changes for this type of event.
In the situation you describe, when the employee’s spouse enrolls in coverage through her employer, the employee can change his election in the following ways:
This permitted election change is allowed for major medical, dental and vision, group term life, AD&D, and disability coverage, but it is not allowed for Health FSA elections.
- Switch from family coverage to single coverage if the spouse’s plan does not cover him
- Drop coverage altogether if the spouse elects family coverage.
This permitted election change is allowed for major medical, dental and vision, group term life, AD&D, and disability coverage, but it is not allowed for Health FSA elections.