Since you asked
An employee asked to change her existing medical coverage after the birth of her child. Is an employer required to allow an employee who has a new dependent to change medical coverage options outside of open enrollment?
Yes — assuming that the enrollment request follows the terms of the group health plan (e.g., made on a timely basis, includes required documentation) and that there is another group health plan coverage option available for which the employee is eligible.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) special enrollment rules apply when a new dependent is gained through marriage, birth, adoption and placement for adoption. Under these rules, a special enrollee may select among all available benefit package options. For example, following the birth of a child, an employee may elect to 1) add the child to the employee’s existing coverage, or 2) enroll himself or herself and the child in a different coverage option.
As explained in more detail below, the employee also would have the right to 1) enroll an existing spouse or 2) newly enroll in coverage if the employee is eligible but not currently enrolled. Note that the employee is not required to enroll the child in order to exercise these enrollment rights.
HIPAA requires employer-sponsored group health plans to allow employees and their dependents to enroll in or change coverage outside of the yearly open enrollment period. These special enrollment opportunities are only available when certain life events occur.
Additional information about the HIPAA special enrollment rules can be found in the Department of Labor’s Self-Compliance Tool for Part 7 of ERISA: Health Care-Related Provisions.
What plans are subject to the HIPAA special enrollment rules?
In general, group health plans subject to ERISA covering two or more current employees at the start of the plan year must comply with HIPAA’s special enrollment rules, along with non-federal governmental plans (self-funded non-federal governmental plans may opt out) and church plans. The requirements do not apply to a group health plan that provides only “excepted benefits,” such as limited scope dental or vision benefits, as well as retiree-only plans.
What events trigger a HIPAA special enrollment right?
The HIPAA rules require group health plans to allow midyear enrollment changes in the following situations:
Who has special enrollment rights?
This will depend on the triggering event. If an employee or an employee’s dependent loses other coverage, special enrollment rights could apply to the employee, the dependent or both. Upon becoming eligible for a state premium assistance subsidy, special enrollment rights apply to the eligible but unenrolled employee as well as an eligible but unenrolled dependent.
For new dependent special enrollments, the employee can enroll himself or herself and the new dependent, if desired. An employee can also choose to enroll an existing spouse after the birth, adoption or placement for adoption of a new child without having to enroll the new child. The rules, however, do not extend special enrollment rights to existing dependents when the employee acquires a new dependent. Note that COBRA qualified beneficiaries have the same rights to enroll family members under the HIPAA special enrollment rules as current employees and plan participants.
What group health plan coverage is available at special enrollment?
HIPAA special enrollment rights include the right of the special enrollee to select among all the benefit options available under the plan. For example, if a currently enrolled employee gives birth to a child and qualifies for special enrollment, the employee may add the newborn to the existing coverage or switch to another benefit option available under the plan (e.g., from an indemnity option to an HMO).
How long does a special enrollee have to request enrollment? And when are elections effective?
A special enrollee must be given at least 30 days to request enrollment from the date of the marriage, birth, adoption or placement for adoption. For a new spouse or a dependent acquired by marriage, coverage must be effective no later than the first day of the first month beginning after the date the plan receives the request for the enrollment. However, coverage for a new dependent must be effective retroactively to the date of birth, adoption or placement for adoption.
Special enrollees must have at least 30 days after group health plan or health insurance coverage eligibility is lost or employer contributions are terminated to request special enrollment. For Medicaid or CHIP, the time frame is at least 60 days. The coverage must begin no later than the first day of the first calendar month beginning after the date the plan receives the request for special enrollment.
An employee or dependent who becomes eligible for a state premium assistance subsidy must have at least 60 days to request coverage under the plan. Coverage must begin no later than the first day of the first calendar month beginning after the date the plan receives the request.
Are the special enrollment rules the same as the section 125 cafeteria plan change in election rules?
No. While some similarities exist (e.g., a cafeteria plan may be drafted to allow certain midyear election changes that correspond with HIPAA special enrollment rights), they are not the same. Furthermore, compliance with one set of rules does not guarantee compliance with the other. Some of the differences between the rules are highlighted below.
Internal Revenue Code (IRC) section 125 cafeteria plan change in election rules:
HIPAA special enrollment rules:
