Important Information Regarding State's Children's Health Program (CHIP) and Status Changes

When the 2001 Cafeteria Plan status change regulations came out we received guidance from the IRS that if an employee became eligible for the CHIP program they could make a change and drop their dependant coverage under their health plan. The regulation regarding this change has now been clarified and we can no longer allow a person to drop dependent coverage during the year when their child qualifies for CHIP. However, if a person loses eligibility under the CHIP program, they can add their dependent to their health coverage and pre-tax the new premium.

The primary goal of regulation was to encourage individuals to obtain replacement coverage should they lose coverage under a state or governmental program. Therefore, please inform your participants that if they qualify for CHIP or other related programs they will need to wait until their plan re-enrollment to make the change.

If you have any questions please contact us.

SIGNIFICANT CHANGE IN COST OF COVERAGE

With the on-going increase in the cost of health insurance, we are often asked if participants can drop their health coverage in the event of a premium increase.

Status Change Regulations allow coverage to be dropped with proof that similar or like coverage has been obtained. If this occurs, the participant must complete a status change form stating that due to the cost increase they are dropping coverage and have obtained similar or like coverage. If no other coverage is available the participant may drop coverage. Participants that experience a decrease in cost are not allowed to make a change until the next plan year.

Most plans allow a 90 day window to make the change after the status change takes effect. Please review your plan document for your window period to make changes or contact us at 856-9933.

Did you know?

Employer provided life insurance for spouse and/or dependents under $2,000 is not taxable to the employee, as it is deemed to be a de minimis (or minimal) fringe benefit.

We will be closed May 28th in observance of Memorial Day.