Q&A: Can an Employee Drop Dependent Coverage When an Adult Child Gets Married?

Question:

One of our employees currently covers his adult daughter under our medical plan, and she is his only covered dependent. The daughter is getting married in a couple of weeks, and the employee wants to drop dependent coverage afterwards. He is not sure whether or when his daughter will enroll in medical coverage through her new husband’s employer.

Under these circumstances, do the cafeteria plan rules allow the employee to drop dependent coverage due to his daughter’s marriage?  

Answer:

Technically, the answer is no. A dependent’s marriage, by itself, is not a Section 125 “change in status” event that allows the employee to revoke coverage for that dependent mid-year.

However, the marriage may lead to a qualifying event if the daughter enrolls in another group health plan through her new husband’s employer. In that case, the employee may be able to drop dependent coverage due to his daughter’s enrollment in the other plan.

In addition, keep in mind the following criteria for dropping dependent coverage mid-year:

• Follow the Plan Document: The employer’s cafeteria plan document must allow an election change due to the dependent gaining or enrolling in other coverage.
• Timing: The request must be made within the plan’s required election change window (usually 30 or 60 days from the date of enrollment).
• Consistency: The requested change (dropping the dependent) must be consistent with the qualifying event. In other words, the dependent must actually enroll in other group health coverage.
• Documentation: Employers should generally: 1) require proof that the dependent has enrolled in the spouse’s plan; and 2) allow the employee to drop dependent coverage only when the other coverage takes effect.
• If the dependent does not enroll in the spouse’s plan: Unless another qualifying event occurs (such as the dependent reaching age 26 and becoming ineligible), the employee typically must wait until the next open enrollment period to remove the dependent.
• Administration: Employers should administer the request based on their written cafeteria plan terms and apply the same documentation and timing rules consistently to all employees.

Not a client of The Miller Group? Connect with one of our employee benefits advisors to learn how our compliance team can help you stay on track and confidently meet your obligations.