Q.- An employee did not enroll his wife in our health coverage since she is living in France. The wife is returning to the U.S. next month and our employee wants to add her to his coverage. Is this allowed under a cafeteria plan?
A.- Yes, if permitted by your plan documents. A change in the place of residency of an employee, spouse or dependent is an event recognized by the IRS as allowing a mid-year cafeteria plan election change [see 26 CFR 1.125-4(c)(2)(v)]. Any change in election must be consistent with the event.
If the employee did not cover the spouse residing in France since the plan would not be useful for her, and if the employee wants to enroll the spouse when she returns to the U.S. since she will now be able to use the coverage, the IRS would recognize this as a permitted mid-year change event.