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Qualifying Life Events

Typically, changes are made to employee benefits packages during Open Enrollment. However, certain events may qualify employees to make changes to their benefits outside of open enrollment.


Section 125- Permitted Election Changes

A. Open enrollment period – The period of time, immediately prior to the annual renewal date, during which an eligible person of a group may elect to enroll or change their current coverage. Open enrollment activity is irrevocable, unless a qualifying event occurs as defined by Section 125 of the IRS Code, even if your group plan is not a qualified plan as defined by Section 125.

B. Entitlement to or loss of eligibility for Medicare or Medicaid: The employee or the employee's dependent becomes entitled to or loses eligibility for Medicare (Part A or Part B) or Medicaid, other than coverage consisting solely of benefits under the program for distribution of pediatric vaccines.

C. Significant cost or coverage changes: A cost increase or decrease refers to an increase or decrease in the amount of the elective contributions under the cafeteria plan, whether that increase or decrease results from an action taken by the employee (such as switching between full-time and part-time status) or from an action taken by the employer (such as reducing the amount of employer contributions for a class of employees).

A significant curtailment of coverage consists of an overall reduction in coverage provided under the group plan so as to constitute reduced coverage generally (e.g., a significant increase in the deductible, the copayment, or the out-of-pocket cost sharing limit under a health plan);

The following will be treated as a significant curtailment with a loss of coverage:

  1. A substantial decrease in the medical care providers available under the option (such as a major hospital ceasing to be a member of a preferred provider network or a substantial decrease in the physicians participating in a preferred provider network);
  2. A reduction in the benefits for a specific type of condition or treatment with respect to which a dependent is currently in a course of treatment; or
  3. Any other similar fundamental loss of coverage.

D. A judgment, decree or order: Resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) that requires health coverage for an employee's dependent child or for a foster child who is a dependent of the employee. The judgment, decree or order is satisfied if it changes the employee's election to provide the required coverage under the employee's plan for the dependent child or permits the employee to make an election change to cancel coverage for the child if the order requires the spouse, former spouse or other individual to provide coverage for the child.

E. Changes in status events, which include the following:

a. Legal marital status: Change in the employee's legal marital status, including marriage, death of spouse, divorce, legal separation and annulment; non-group conversion coverage will be available to the terminated spouse.

b. Number of dependents: Change in the employee's number of dependents, including birth, death, adoption and placement for adoption. If dependent coverage is available under the group policy/plan and an eligible employee who has previously not elected coverage acquires a dependent, we require that the employee must become insured when the eligible dependent becomes insured. Note: A newborn child is automatically covered without fee from his/her date of birth for 31 days.

c. Employment status: Change in the employment status of the employee or the employee's dependent, including termination or commencement of employment, a strike or lockout, a commencement of or return from an unpaid leave of absence or a change in worksite. This also includes a change in the employee's or the employee's dependent's employment status resulting in the individual becoming or ceasing to be eligible under the group policy/plan.

d. Eligible dependent status: Change in the eligibility of a dependent due to reaching a limiting age, change in student status or any similar circumstance. Coverage for students will continue until the student meets the limiting age or until the end of the month in which such child ceases to be a full-time student, marries or becomes employed full-time, whichever occurs first.

F. Addition or improvement of a benefits package option. If a plan adds a new benefit package option or other coverage option, or if coverage under an existing benefit package option or other coverage option is significantly improved during a period of coverage, employees may revoke their election under the cafeteria plan (whether or not they have previously made an election under the cafeteria plan or have previously elected the benefits package option) and instead make an election on a prospective basis for coverage under the new or improved benefit package option.

G. Change in coverage under another employer plan. An employee may make a prospective election change that is on account of and corresponds with a change made under another employer plan (including a plan of the policy holder or of another employer) if:

a. The other cafeteria plan or qualified benefits plan permits participants to make an election change that would be permitted under the applicable provisions of Section 125; or

b. The cafeteria plan permits participants to make an election for a period of coverage that is different from the period of coverage under the other cafeteria plan or qualified benefits plan.

H. Loss of coverage under other group health coverage. An employee may make an election on a prospective basis to add coverage under the group policy/plan for the employee or employee's dependent if such employee or dependent loses coverage under any group health coverage sponsored by a governmental or educational institution, including a:

a. State's children's health insurance program under Title XXI of the Social Security Act;

b. Medical care program of an Indian Tribal government, the Indian Health Service, or a tribal organization;

c. A state health benefits risk pool; or

d. A foreign government group health plan.

Consistency Rule: In all cases, any election change as a result of any change in status must be on account of and correspond with a change in status that affects eligibility for coverage.  For example, if the change in status is the employee's divorce, annulment or legal separation from a spouse, the death of a spouse or dependent child, or a dependent ceasing to satisfy the eligibility requirements for coverage, an employee's election to cancel health coverage will apply only to the spouse involved in the divorce, annulment or legal separation, the deceased spouse or dependent child, or the dependent that ceased to satisfy the eligibility requirements.

Other Changes to a Member/Insured Contract/Policy
All requests must be made within 31 days of the qualifying event.  If the request is not received in the Office of Human Resources within 31 days of the qualifying event, the member/insured will need to wait until the group’s open enrollment period. A late addition will not be processed until the group’s open enrollment. It is the responsibility of the employer to resubmit the form during the group’s open enrollment period.

  1. Death: The termination of the member/insured or dependent will occur the day after the date of death. Non-group conversion coverage will be offered to the terminated spouse.
  2. Deleting a Dependent: A dependent can be deleted throughout the year. A member/insured does not have to wait for open enrollment or a life event. The request must be received prior to, but not more than 60 days of the date requested. If the change is received after the date requested, refunds are limited to 31 days of premium. 

Medicare

  1. A member/insured that is eligible for Medicare or turns age 65 has different options of coverage dependent upon the size of the group. The information contained in 1A and 1B list the member’s/insured’s options:
    A. For an employer with over 20 employees for 20 or more calendar weeks in the previous calendar year (TEFRA A) - In the event that a member/insured is Medicare eligible or becomes eligible for Medicare, if the member/insured is a full time employee, he/she may remain as a member/insured of the active group or select to leave the group and enroll in the non-group coverage. If the member/insured selects non-group in this situation, they must sign a Medicare waiver form. If the member/insured is retired, the member/insured must transfer to either their company’s retiree group (if available), or a Medigap non-group product. Coverage changes may not be retroactive beyond the Medicare Timely Claim Filing date as determined by the Federal Government.
  2. ESRD - Medicare is secondary to group health plans (GHPs) for individuals entitled to Medicare based on ESRD for a coordination period of 30 months regardless of the employee and employer status. The provisions for ESRD are applied without regard to the number of individuals employed and the employer coverage does not have to be based on current employment only. Medicare is secondary to GHP coverage from COBRA or a retirement plan. Medicare is secondary during the coordination period, even if the employer policy or plan contains a provision stating that its benefits are secondary to Medicare.

Dependent: To be eligible to enroll as a dependent, a person must be: a) the spouse of the member/insured; or b) the member/insured’s or member/insured’s spouse’s unmarried child(ren) including: newborn children, step-children, children legally placed for adoption, legally adopted children, handicapped individuals and children covered under guardianship. Legal written documentation to verify the relationship between a dependent and member/insured.

Eligibility shall continue past the limiting age for unmarried children who are incapable of self sustaining employment due to mental retardation, physical handicap, mental illness or developmental disability.

Employee: An individual, who performs services in the regular course of the business of the policy holder, is considered full time, works a minimum of 32 hours per week, receives wages or salary in accordance with the Kentucky minimum wage laws and is reported on federal and/or state payroll tax. 

Full Time Student: An individual who is either a high school student or enrolled in a recognized college or university carrying a minimum of twelve (12) undergraduate credits or nine (9) graduate credits per semester, or enrolled in a trade or secondary school. 

TEFRA: The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 was designed to make Medicare the secondary payer for certain employees and dependents. Under the TEFRA law and subsequent legislation, the group health plan is the primary payer and Medicare is the secondary payer of claims for working-aged employees and certain dependents in employer groups with 20 or more full-time and/or part-time employees.

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