Benefits Q&A: Can an Employee Move from the Marketplace to Our Company Plan?

Question:

A new employee and his wife are each covered under a different policy and carrier through the Health Insurance Marketplace. The wife is pregnant and due in a few months. The employee is trying to decide whether he and/or his wife should enroll in our coverage now or wait until after the baby is born. Is there a rule – either through the Marketplace or otherwise – that would prevent him from doing that?

Answer:

This question actually involves several related issues:

• Can the employee drop Marketplace coverage when his child is born?

Yes. In general, there is no limitation on when an individual who has Marketplace coverage is allowed to discontinue such coverage. A qualifying change in status (often referred to as a “qualifying event”) would only be needed in order to enroll in coverage outside of the Marketplace’s annual open enrollment period.

• Can the employee, spouse and child enroll in your company plan when the child is born?

Yes. The birth of a child qualifies employees, spouses and dependents for a HIPAA special enrollment period on the employer health plan.

• Can the employee elect to pay for the newly added coverages on a pre-tax basis through the cafeteria plan?

Probably. If your company has a cafeteria plan, it almost certainly recognizes the birth of a child as a change in status, allowing the employee to change his coverage elections (i.e., pay for newly added coverages on a pre-tax basis). It’s best to check your cafeteria plan document to make 100% sure.