What constitutes the child being a dependent? In the situation I have with an employee, the baby was born on the 20th of February and the couple gained legal custody of her before the adoption was final. However, according to the court papers, the legal custody papers weren't signed until February 24th. Four days after the birth. The employee wants to claim the birth expense on his medical reimbursement plan. His insurance co did cover their share of the birth expenses. I'm not sure if this expense should be allowed or not. Any comments, suggestions would be greatly appreciated!

Sheryl:
Seems like a very generous insurance company to pay for the birth of a non-dependent child. If they did, what expenses are left to be paid? Does the employee have an EOB that shows that his insurer paid for the birth?
What rational did the employees'insurer use for paying for the birth? It just seems odd to me unless there are some mitigating surcomstances surounding the adoption proceedings. I would not consider the cahrges prior to custody as being eligible for a Medical Reimbursement plan. But maybe someone has seen a specific ruling on this.

Thanks for you quick reply, Kip. The insurance company looked at Missouri adoption law and somehow determined that they could amend the coverage date back to the date of birth. I have no idea what criteria they used. I have tried to explain to this client that the 125 plan follows federal law not state law. I have left the decision up to the employer to make. I just wanted someone elses' opinion. Thanks!

Section 152(B)(2) might be helpful is determing dependent status as it does address not only adopted children, but also foster children and those placed for adoption.

Lisa
It would appear, after reading Section 152(b)(2),in Sheryl's case the newborn was nat a dependent. What do you think?

Thanks, Lisa, I'll check that out.