Beginning in 2014, Saint Joseph's College began offering benefit-eligible employees the opportunity to enroll a Legally Domiciled Adult (LDA) in our benefit plans. Below is information related to that benefit option in the form of frequenly asked questions.
Who can I enroll under the Health and Dental Plans?
You can enroll yourself and one other adult member of your household (hence the designation as “LDA”): either one qualified adult dependent or your spouse, along with any qualifying child dependents.
Who qualifies for coverage as a ‘Legally Domiciled Adult Dependent’?
An LDA is an individual over age 18 who has lived in the same principal residence as the employee for at least 12 months and remains a member of the employee's household throughout the coverage period; and who either:
(Category A) has a close personal relationship with the employee (not a casual roommate or employee, such as a nanny or a personal care attendant), shares basic living expenses and is financially interdependent with the employee, is neither legally married to anyone else nor legally related to the employee by blood in any way that would prohibit marriage, or
(Category B) is the employee's blood relative who meets the definition of his or her tax dependent as defined by Section 152 of the Internal Revenue Code during the coverage period.
Can I enroll myself, my spouse, and an LDA under the Health and Dental Plans?
No. You can elect coverage for a maximum of two adults including yourself, in addition to any eligible dependent children. If you're legally married you can elect adult coverage for you plus your spouse, and if not married, for you and a qualified LDA.
If I have family coverage now can I also opt for LDA coverage?
Coverage is available to two adults - the employee and either a spouse or LDA. If the employee is the only adult now using the coverage and the other adult meets the eligibility requirements for AD status, the second adult can be added, provided you have not covered another AD within the past twelve (12) months. If, however, you cover your legal spouse under family coverage, you cannot also cover an LDA.
Are the children of an LDA eligible for coverage?
A dependent child of the LDA who has lived in the same principal residence as the employee for at least 12 months and who is the LDA’s dependent child who meets the definition of his or her tax dependent as defined by Section 152 of the Internal Revenue Code during the coverage period, is eligible for the Health and Dental coverage as long as the child remains a member of the employee's household throughout the coverage period.
Can I enroll a parent as an LDA if (s)he is my tax dependent, but we don’t live together?
No. To qualify as an LDA, an individual must meet all eligibility requirements which include - for both Categories A and B described above - that the adult has lived with you in your principal residence for at least 12 months before enrollment and continues to live with you during the coverage period.
When can I enroll an LDA for coverage?
You can enroll an LDA under the Health, and Dental Plans within 31 days of your date of hire, during Open Enrollment, or within 31 days of a qualifying change in status. After the termination of coverage for an LDA, there is a 12 month waiting period before a new LDA may be enrolled.
Will Saint Joseph’s College provide primary coverage if the LDA is 65 years old?
How much will these benefits cost the employee?
Employees electing LDA coverage contribute at the same level as they would contribute for Family coverage, though the effect on final take-home (net) pay may be different. The Health and Dental benefits are available. There is no option available for dependent life insurance. Please see the question below about the tax treatment of employee and Saint Joseph’s College contributions towards this coverage.
Are there tax, financial or other legal implications of these benefits?
Category A: IRS regulations require that employee contributions for coverage of LDA's falling into Category A must be made on an after-tax basis ONLY. Accordingly, Saint Joseph’s College calculates what the employee would pay for his or her own coverage and takes that amount on a pre-tax basis. The remaining employee portion of the premium is then paid with post-tax dollars.
The amount which the College contributes towards the total cost of the premium must be considered as imputed income according to IRS regulations. The difference between the cost of what the College would pay for the employee (including any qualifying children) and the total amount paid by the College (what Saint Joseph’s College therefore pays for the “non-Code-dependent” individuals) will be shown on the employee’s bi-weekly paycheck as imputed income. This will result in the employee’s take-home (net) pay being significantly reduced, depending upon the benefits chosen.
Category B: On the other hand, employee contributions for coverage of LDAs who are in Category B may be made on a pre-tax basis. There is no imputed income associated with the College’s portion of the contributions.
What is Section 152 of the Internal Revenue Code and why is it important?
To qualify for Category B, an individual must meet the definition of "dependent" set forth in Section 152 of the Internal Revenue Code. That section specifies the conditions of financial support, relationship and citizenship necessary to attain "dependent" status under federal tax law.
As discussed above, the tax treatment of the employer-provided coverage varies depending upon whether or not the LDA is the employee's tax dependent. In addition, federal law prohibits the reimbursement of expenses of an LDA who is not also a tax dependent under a Medical Spending Account (FSA or HSA).
To find out more about the specifics of IRC Section 152 go to www.irs.gov or contact Human Resources for a copy. Given the complexity of the criteria, we recommend that you consult with your attorney or tax professional about the specifics of your particular situation.
What documentation is required to enroll a qualified adult for coverage under the Health, Dental and Vision plans?
You'll need to complete, sign, and return a “Declaration of Legally Domiciled Adult Dependency” form by the specified 31-day enrollment deadline. For Category A dependents, Saint Joseph’s College requires proof of financial interdependence, which can be established by three of the following:
For Category B adult dependents, you may be required to complete a new declaration each year to certify and confirm the status of individuals for whom you seek to provide coverage on a pre-tax basis.
When does an LDA become ineligible for coverage under the Plans?
LDA coverage under the benefits plans will end on the earliest of: a) Midnight of the day on which an employee's employment terminates; or b) Midnight of the day in which the individual no longer satisfies the eligibility criteria for LDA status.
Employees must notify the Human Resource Department immediately of any changes in eligibility status.
When the LDA is no longer eligible for coverage, is that individual eligible to elect COBRA continuation coverage?
No. Only a spouse or dependent children of a covered employee may be a COBRA beneficiary when they lose coverage. However, Saint Joseph’s College intends to voluntarily extend a comparable election right to adult dependents of a covered employee to elect continued coverage comparable to COBRA in his or her own right. If the employee remains an active Saint Joseph’s College employee and the AD relationship terminates, the AD also may elect COBRA comparable coverage. LDAs (or dependent children) who lose coverage will receive information under separate cover about rights to (and cost of) COBRA comparable coverage.
How much will the coverage actually cost me? (Examples of post-tax & imputed income)
When considering whether to take the LDA coverage, employees need to consider three things: 1) how much they will pay for the coverage on a pre-tax vs. post-tax basis (the bi-weekly premium), 2) how much “imputed income” will be attributed to them each pay period, and 3) the effect of the imputed income on their own individual taxes. As noted above, “imputed income” is the dollar value of the Saint Joseph’s College contribution towards the coverage. By law, the value of the coverage provided by the employer must be attributed or “imputed” to the individual, because the LDA is not eligible for tax-preferred treatment under the federal tax code.
While we cannot determine the exact amount of taxes you’ll be charged, since taxation is based on individual income level and withholdings, please refer to the 2015 LDA Benefit Rates for how much various benefits will add to your paycheck every two weeks.