One of the most common questions we receive pertains to Section 125. And here it is: When can an employee change his or her elections under a Section 125 plan?
Under a Section 125 plan, participant elections generally must be irrevocable until the beginning of the next plan year. However, when a participant experiences one of several specific recognized events, he or she may be permitted to make a change in election that is consistent with the event. A change in election must be made prospectively, except in the few cases where HIPAA requires that a change be made effective retroactive to the date of the event.
A Section 125 plan may allow a participant to change his or her elections related to Section 125 plan benefits (other than flexible spending accounts) upon the occurrence of any of the following events:
- Change in status (for example, employee’s legal marital status, number of dependents, employment status, dependent eligibility change or change in residence);
- Significant cost increase;
- Significant curtailment of coverage;
- Addition or elimination of benefit package option;
- Change in coverage under other employer’s plan;
- Loss of group health coverage sponsored by a governmental or educational institution;
- FMLA leaves of absence;
- COBRA qualifying events;
- HIPAA special enrollment events;
- Judgment, decree or court order, such as a Qualified Medical Child Support Order (QMCSO); or
- Medicare or Medicaid entitlement.
Now you have the list!