For the most part, when you enter into a health and dental benefits plan, the plan will also be available to your dependents. In fact, many insurance companies like to make this mandatory.
You can waive family coverage, or waive coverage completely if your spouse already has a plan, but insurance companies prefer to coordinate coverage between the two plans so that one plan picks up where they other one leaves off. This way you get extra benefits and the maximum use out of both plans.
While rules about dependents are actually defined by Canada Revenue Agency (CRA), there are some nuances amongst insurance companies that are helpful to understand. Here are some of the questions we hear the most:
Can you add your spouse later as a dependent for your group benefit plan?
If you exclude your spouse from your plan and then want to add them later, most insurance companies will require the spouse to go through a health evidence process. To protect themselves from high claims, insurers tend to assume that someone is in the worst health possible and will need lots of costly medications. The onus is on you to prove that is not the case.
This also applies to a newly married employee. If you don’t add your spouse right away, even waiting a month could set off alarm bells. The insurance company may think your spouse didn’t need coverage before, but now they’ve had a serious health crisis and will need to make lots of claims.
There are exceptions, particularly if it can be demonstrated that a spouse has recently lost coverage.
Who is considered a spouse for a group benefits plan?
Aside from couples who are legally married, couples who live together as common-law spouses are also eligible as dependents. Insurance companies have also long recognized same-sex partners as eligible dependents for group benefits plan.
What happens when you have a new spouse?
After a relationship ends, it’s not always as simple as removing your ex-spouse as a dependent on your group benefits plan and adding your new spouse.
In some cases, the court may order you to continue providing medical expenses for your ex-spouse. Since you can only have one spouse as a dependent for a group benefits plan, that means that you either have to keep your ex-spouse on your benefits plan (and then your new spouse will have no coverage) or pay for their medical expenses out of your pocket.
How long can a child be considered a dependent for a group benefit plan?
Generally, kids are considered dependents up until age 19, as long as they are still living at home and haven’t moved out and started working.
If the child goes on to university, then most insurance carriers will cover them for as long as they are in school, up until their 25th birthday. There are different requirements for submitting proof of student status, and how long coverage lasts. For example, some coverage lasts until the end of the summer after graduation, and others lasts until the end of the calendar year in which the 25th birthday takes place.
Just because your children are depending on you for financial support doesn’t make them dependents on your group benefits plan. A 28-year-old kid who has “failed to launch” out of your basement cannot be a dependent on your group benefits plan.
These rules can vary slightly from insurer to insurer.
When can other children be considered dependents for your group benefits plan?
If you have a spouse or partner who has moved under your roof and brought kids from their first marriage, they can also be considered as dependents.
A disabled adult child may also be eligible to remain a dependent past the age of 19. There is definite criteria for that, such as being fully dependent and not able to function on their own.
What can you do once your dependent is no longer eligible for your group benefits plan?
When a dependent comes of age and is no longer eligible for the plan, they are often eligible to convert to their own individual plan for health and dental with the same insurance carrier. There will be a limited window of time, e.g., 60 days, when they can be covered without having to go through a health evidence process.
This is typically only recommended for someone with special medical needs and costs. Otherwise, the premiums for an individual plan would likely cost more than the sum of any medical expenses incurred.
Do extended family members count as dependents for group benefits plans?
Generally speaking, extended family members (parents, parents-in-law, siblings, cousins, etc.) cannot be considered dependents on your plan. It is possible to get a court order for Canada Revenue Agency (CRA) to recognize a disabled parent or other family member as a dependent, but this is a complicated and difficult process, and definitely an exception.
Please don’t hesitate to contact ASSOCIUM if you have questions regarding the status of dependents on your benefits plan.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.