Adding Other Dependents During HIPAA Special Enrollment?

Question: One of our employees recently had a baby and has asked to enroll her newborn child in our health plan. Can this employee add other dependents (such as her spouse and/or other children) to our health plan at the same time?

Answer:

A federal law – the Health Insurance Portability and Accountability Act (HIPAA) – requires employers to allow employees (and their eligible dependents) to enroll in health coverage if they experience a special enrollment event. Special enrollment events include certain major life events, including getting married, having a baby, adopting a child, or losing other health coverage.

More specifically, health plans that offer dependent coverage must provide a special enrollment opportunity when an employee acquires a new dependent child through birth or adoption (including placement for adoption). Following this event, the employee, his or her spouse and the newly acquired dependent all have special enrollment rights. Thus, following a child’s birth or adoption, an employee can enroll her new baby and her spouse in the health plan, assuming the plan offers dependent coverage for children and spouses.

Only the employee, spouse and any newly acquired dependents have special enrollment rights in this situation. Other dependents (for example, siblings of a newborn child) are not entitled to special enrollment rights upon the acquisition of a new dependent. Some health plans go beyond what HIPAA requires and allow the employee’s other children to be enrolled following this event. However, to avoid unintended liability, employers should consult with their health insurance issuers or stop-loss carriers before providing more expansive enrollment opportunities.  

Also, many employers sponsor cafeteria plans (or Section 125 plans) to allow employees to pay for their health coverage on a pre-tax basis. Generally, employees’ elections under a cafeteria plan must be made on a prospective basis and cannot be changed until the beginning of the next plan year. However, a cafeteria plan may be designed to permit mid-year election changes that correspond with HIPAA’s special enrollment rules. This allows employees to pay for their health coverage on a pre-tax basis when they obtain coverage during a special enrollment period. In addition, the cafeteria plan rules go beyond HIPAA and permit election changes to add other dependents (for example, siblings of a newborn child) at the same time. This accommodates plan designs that are more generous than what is required under HIPAA’s special enrollment rules.

Keep in mind that if a cafeteria plan does not allow mid-year election changes for HIPAA special enrollment events, eligible employees and dependents must still be allowed to enroll in health plan coverage and pay their premiums on an after-tax basis.

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