Our client is asking who is eligible to make changes during a qualifying event. Their employee has employee-only coverage. His spouse has employee-only coverage under her employer’s plan. They had a baby last month and want to add the baby and wife to the husband’s plan. Is this a qualifying event for all? Meaning, can the wife and child be added to the husband’s plan, or conversely, can the husband and child be added to the wife’s plan? Both employers have self-insured plans.
If the husband’s or wife’s plan allows mid-year election changes due to a change in status event or a HIPAA special enrollment event, then the husband or wife can add the baby and the other spouse.
Acquiring a dependent through birth or adoption is a change in status event, for which the IRS permits cafeteria plans to allow participants to make mid-year election changes. The examples in the IRS election change rules create a “tag-along” rule, which allows adding other eligible individuals such as a spouse when adding a newly eligible dependent. This means the employee or spouse can add the baby and the other spouse to his or her plan so long as the plan permits election changes that correspond to a change in status. A plan can limit which changes in status qualify and could not implement the tag-along rule, but this is rare.
Acquiring a dependent through birth or adoption is also a HIPAA special enrollment event for the employee, the employee’s spouse, and the newly acquired dependent. The HIPAA special enrollment rules specifically give the spouse a special enrollment right when an employee is adding a dependent. Although cafeteria plans are not required to allow participants to change their elections for HIPAA special enrollment events, virtually all cafeteria plans allow such changes.