I am struggling here today to put my finger on how the regs treat changing medical plans when adding or removing a dependent (i.e. birth/adoption/marriage or divorce). Is there anything in the regs that would require the employee to maintain coverage in the same medical plan. I see the topics mentioned about work location and an HMO. However, outside of this situation - can we permit employees to elect a different plan?

We are self-insured on all of our plans, so it really doesn't matter to us. Any advice would be greatly appreciated.

I may have found my answer... after a google search I found this..

http://wiki.answers.com/Q/Is_there_a_Secti...ing_a_plan_year

Example 10. (i) Employer Y maintains a calendar year cafeteria plan under which full-time employees may elect coverage under either an indemnity option or an HMO. Employee C elects the employee-only indemnity option. During the year, C marries D. D has two children from a previous marriage, and has family group health coverage in a cafeteria plan sponsored by D's employer, Z. C wishes to change from employee-only indemnity coverage to HMO coverage for the family. D wishes to cease coverage in Z's group health plan and certifies to Z that D will have family coverage under C's plan (and Z has no reason to believe the certification is incorrect).

(ii) The marriage is a change in status under paragraph (c)(2)(i) of this section. Under the consistency rule in paragraph (c)(3) of this section, Y's cafeteria plan may permit C to change his or her salary reduction contributions to reflect the change from employee-only indemnity to HMO family coverage, and Z may permit D to revoke coverage under Z's cafeteria plan.

However, I would really like to read it from the actual regs rather than a website. Does anyone have a link to the full S1.125-4 regs?

Initially, I could not quite understand your original post. Medical coverage is not the same as medical plan.

For the Treas Regs visit: www.changeofstatus.com and look under "Resources".