Monday, January 31, 2011

Can an employer require an employee to take their dependent on their taxes for health insurance coverage?

I need to get health insurance for my kids and their dad was awarded the tax write off for them
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Yes, they can have that requirement, if it is clearly spelled out in the dependent eligibility requirement on your benefit plan. (Look in your Summary Plan Document/Certificate of Coverage under the section labeled "Eligibility" to see whether that's the case.) I used to work on Dependent Eligibility Audits for large self-funded corporations, and can tell you that there are many major corporations that actually do have this requirement. I wouldn't say that its a "common" requirement for biological children, but its not at all unusual for stepchildren. I once had to remove dozens of step-children from an employer's benefit plan after an audit, because they weren't claimed as tax dependents. State insurance laws vary, so there may be some individual states that prohibit this. However, even if your specific state does not permit it, if your employer is self-funded they can do it anyhow. (Self-funded employer plans are not subject to most state-specific insurance laws.) Check your plan documents to confirm whether it is specifically spelled out in the eligibility requirement. If its not specifically stated, then your employer can't require it. (At least, not without modifying the terms of your policy at the next open enrollment.) P.S. Some employers will allow alternate documentation, if you have a divorce situation where you don't claim the kids every year. For example, documentation proving that the dependent resides in your home or a divorce decree showing the custodial/tax exemption arrangement. You can ask your employer whether there is anything else they will accept other than a tax document.
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