Question of the Month
Please confirm whether an employee’s spousal relocation of personal residence to the United States following a period of several years living as an ex-patriot (e.g., residing outside of the geographic boundaries of the US), is deemed a qualifying life event for IRS purposes, sufficient to allow the participant to make a qualifying mid-year change of election for the purpose of enrolling the participant’s spouse in the underlying employer sponsored dental insurance program?
Answer
Yes, if the change in the spouse’s place of residence is deemed to be an IRS qualifying life event (“QLE”), the participant is eligible to make a qualifying mid-year change of election for the purpose of enrolling their spouse in the dental plan. However, this is also contingent upon the written provisions governing the underlying dental plan (or wrap plan document, to the extent adopted). To glean any certainty respecting the plan’s adoption the full range of IRS qualifying life events giving rise to enrollment eligibility, an inspection of the written plan document’s relevant provisions is required. This is because the written plan document may not adopt the full range of IRS qualifying life events related to enrollment eligibility, or the document may specifically exclude “change in residence” from its enumerated qualifying life events; thus, curtailing the plan’s observance of certain IRS identified QLEs.
Consistent with Internal Revenue Code (“IRC”) Section 125, and IRC Section 125’s underlying proposed agency rulemaking, life events occurring within one of the following designated categories are deemed qualifying change in status life events (“QLEs”), the happening of which may enable a participant to make a qualifying mid-year change of election, including enrollment of a newly eligible spouse, as appropriate:
| Qualifying Life Events: | Examples of Qualifying Life Events: | |
| Legal Marital Status of the Employee | Marriage; Death of Spouse; Divorce; |
Legal Separation; or, Annulment. |
| Number of Dependents of the Employee | Birth; Death; |
Adoption; or, Placement for Adoption. |
| Employment Status of the Employee, Dependent, or Spouse | Termination or Commencement of Employment; Strike or Lockout; Commencement or Return from an Unpaid Leave of Absence; or, Change in Worksite. |
Note: if the benefit plan of the employee, spouse, or dependent conditions enrollment eligibility upon employment status, and there is a change in enrollment status, the change is a change in employment. |
| Dependent Satisfies (or ceases to satisfy) Eligibility Requirements | On Account of Attainment of Any Required or Mandated Age; Student Status, or, Any Similar Circumstance. |
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| Change of Residence | Change in the Place of Residence (affecting the employee, spouse, or dependent). | |
| Application of the Consistency Rule | Note: an election change satisfies these requirements with respect to accident or health coverage or group-term life insurance only if the election change is on account of, and corresponds with, a change in status that affects eligibility for coverage under an employer’s plan. | |
For more information
For questions regarding this Legislative Update or any other related compliance issues, please contact your Burnham Benefits Consultant or Burnham Benefits at 949‐833‐2983 or inquiries@burnhambenefits.com.
This Legislative Update was prepared by the Baldwin Regulatory Compliance Collaborative (the “BRCC”), a partnership of compliance professionals offering client support and compliance solutions for the benefit the partnerships in the Baldwin Risk Partners organization, which includes Burnham Benefits Insurance Services (“Burnham Benefits”).
Burnham Benefits and the BRCC do not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with applicable federal and state law requirements, and is based on our interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.