Employers that cover domestic partners need a clear process for documenting eligibility. Learn when to use an affidavit and how missing documentation may affect claims administration and stop-loss reimbursement.
We allow employees to cover domestic partners under our medical plan. We are considering using a domestic partner affidavit going forward, but we have two related questions.
First, if employees have already enrolled domestic partners in the plan, should we ask them to complete the affidavit now? Second, what are the implications if we decide not to require documentation of domestic partner status at all?
Requiring a domestic partner affidavit is generally considered a best practice, including for domestic partners who are already covered. You can explain this as an update to your eligibility documentation process or as part of a routine eligibility audit.
If you don’t require documentation, the main risk is that you may have difficulty proving the domestic partner was eligible under the plan. That may not matter in routine situations, but it could become important if the domestic partner has high claims.
The two most significant problems to keep in mind can arise when a carrier or TPA (Third-Party Administrator) questions the existence of a domestic partnership.
First, the carrier or TPA may question the domestic partner’s eligibility and require proof that the domestic partnership existed and when it began. That type of documentation can be harder to obtain after the fact, especially if the relationship has existed for several years. In some cases, this may be more of an administrative inconvenience than a legal problem. However, if claim processing is delayed long enough, the employer could run into stop-loss filing deadlines or other reimbursement timing requirements.
For self-insured plans, the stop-loss carrier may take an even stricter position. Stop-loss contracts reimburse employers only for claims incurred by individuals who are eligible under the plan and covered in accordance with the plan’s terms. If the carrier determines that the domestic partnership was not properly documented, or that the individual did not meet the plan’s eligibility requirements, it may deny reimbursement for those claims. It may also be less willing than a TPA to accept after-the-fact documentation of a claimed historical relationship.
This creates a potentially serious financial risk. You could end up responsible for paying the domestic partner’s claims under the health plan, while being unable to recover those amounts from the stop-loss carrier.
Unless your carrier requires a specific level of proof, it’s largely up to you. Some employers use a simple affidavit signed by the employee and domestic partner. Others require supporting documentation, such as evidence of shared residence or joint financial responsibility. The right approach depends on the plan’s eligibility language, the employer’s administrative preferences, and any requirements imposed by the TPA or stop-loss carrier.
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.
