Question:
We have an employee who is requesting to change a current benefit election. We are not currently in our open enrollment (OE) period, but they have asked to make the change immediately. What are our options for changing a benefit election outside of an OE period?
Answer:
Whether an employee can add or drop benefits outside of enrollment requires an analysis of several inter-related factors and regulatory requirements. Here’s overview of the main steps to take when an employee requests an election change outside of open enrollment:
- Is the employee asking to add medical coverage (either employee-only or family coverage)? These types of changes are subject to HIPAA’s special enrollment rules.
- If yes, has the individual seeking coverage experienced a situation that qualifies him/her for a HIPAA special enrollment period? (Examples: loss of other coverage, new dependent by birth, adoption or marriage, new or lost eligibility for Medicaid or CHIP, and others)
- If yes, has the employee met the applicable deadline to notify the employer of the change? Deadlines under HIPAA are different depending on the scenario. Some are 30 days; some are 60.
- If yes, allow the requested change.
- If no, see #4 and #5.
- Consult the cafeteria plan document to see if the employee can make the requested change
- Changes in status. The types of situations which entitle an employee to change their elections under cafeteria plan rules are similar but not identical to HIPAA. Make sure the individual requesting the change is experiencing one.
- Deadline. The employer sets the deadline for non-HIPAA election changes under the cafeteria plan. Check your plan document to find your applicable deadline.
- Allow the election. If authorized by the cafeteria plan (including meeting any applicable deadlines), allow the requested change.
- Consider making an exception. For employees that haven’t met the requirements to change their benefits, see #5.
- It may be necessary to consider whether there was an administrative error that prevented an employee from electing or dropping coverage through no fault of their own. Depending on the exact situation, it may be advisable to approve the requested change. This must be considered on a case-by-case basis. It is feasible that you could allow a change due to employee error, but that can be harder to justify. One example I’ve seen is when the employee elected family coverage when he didn’t have a family, or similar cases where it’s clear that the election was not what the employee intended.
