IRS Notice 2014-55 (PDF) expands the situations in which individuals may change their health coverage elections under a Section 125 (cafeteria) plan.
Please note that plans are not required to adopt the additional election change rules, but if adopted, they will be included in the plan documents.
When employees can change their elections
Mid-year election changes related to coverage availability through a Health Insurance Marketplace plan are permitted if they meet specific exceptions for certain “status events,” as outlined in the two scenarios below.
An employee may revoke their plan election to purchase coverage through a Marketplace if:
- The employer has reduced the employee’s hours of service, and the employee will average fewer than 30 hours of service per week, but the reduction does not affect eligibility for the group health plan coverage; or
- The employee would like to terminate coverage under the employer’s group health plan and purchase individual coverage through a Marketplace, without experiencing duplicate coverage or no coverage.
A cafeteria plan may allow an employee in either of these situations to prospectively revoke their group health plan election before the end of the plan year, as long as the plan is not a health FSA and provides minimum essential coverage (MEC).
Employees may not revoke coverage retroactively, and certain other conditions must be met for the change to be allowed.
Questions?
If you have any questions about this notice, please call the PSA Sales and Service team at 800-422-7038, TTY: 711. (We accept all relay calls.) Or, email PSAsales@PacificSource.com.