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This tool is designed to help employers decide whether a requested mid-year election change under a Section 125 Cafeteria Plan is permissible under IRS rules. Consistent with ComplianceDashboard’s focus on employer-sponsored health plans, this tool is limited to requested changes relating to employee payment of health insurance premiums (premium only or POP plans), employee contributions to Health FSA’s and employee contributions to HSAs.

Information You Need to Know Before Using this Tool

Before using this tool, please note the following::

In general, election changes are permissive. That is to say, a cafeteria plan can be written to incorporate only some or even none of the permitted changes. This tool assumes that the plan incorporates the full extent of the election changes permitted under IRS rules.
The IRS rules themselves are largely substantive; plans can impose their own process requirements; for example, a plan may require change requests to be submitted on a particular form or within a certain number of days after the occurrence of a status change event. This tool assumes that all processes required by the plan have been followed.
Application of the IRS rules is not always a black or white decision. In some cases, exercise of judgment or discretion is required to determine whether a request should be allowed. Use of this tool is no substitute for that exercise. Consistency is important. Don’t allow the CEO to make an election change if you wouldn’t (or haven’t) allowed the mail room clerk to make the same change under similar circumstances.
In some cases, the rules require that employees “certify” that a particular event has occurred. There is no special form for this certification. Best practices would require something in writing.
Any discussion in the rules involving spouses includes same-sex spouses if the marriage was legally contracted in a State that recognizes same-sex marriages. Domestic partners and persons joined in “civil unions” are not spouses and may not be treated as such under these rules. IRS rules do not require employers to provide cafeteria plan coverage for same-sex spouses.
When the rules talk about “dependents”, they generally mean individuals who qualify as tax dependents under Sec. 152 of the Internal Revenue Code. However, in the case of the employee’s child, the Affordable Care Act expanded the definition of “dependent” for health plan purposes to the end of the year in which the child turns 26, regardless of whether he or she otherwise qualifies as a tax dependent.
This tool assumes that the employer has already determined whether an individual is a dependent or a same-sex spouse.
All election changes are prospective only, except where expressly noted.
There is overlap among various status change rules. For example, the change in employment, marriage and birth status change rules cover the same topics as those covered under HIPAA special enrollment events. Despite the overlap, there are differences: a change not permitted under one rule might be permitted under another. Users should make sure they check all rules that may apply.
No tool can anticipate every possible election change request. This tool tries to address the most common types of requests. If a request does not fit into one of the categories discussed, it probably is not permitted. Employers are urged to confer with their counsel on unusual requests.

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Previous Questions

Current Question

Type of Election Ch

To begin using the tool, indicate the type of mid-year election change

The change is related to health insurance premiums or HSA contributions.

The change is related to a Health FSA.

The change is not related to these options

Information on Premium Only Plans (POP) Change in Status

Type of POP Plan Change

Indicate the type of POP plan change:

The change is due the employee’s marriage.

The change is due to the employee’s divorce or legal separation.

The change is due to a change in the number of an employee’s dependents as a result of birth, adoption or placement for adoption.

The change is due to a change in employment status.

The change is due to a change in residence of an employee, spouse or dependent.

The change is not related to these options - see other options.

Answers

Marriage

Note that the term “marriage” includes a same-sex marriage contracted in a state that recognizes same-sex marriage, even if the state in which the couple currently lives or the employer does business does not recognize such marriages.

Does the employee wish to increase his or her election to pay additional health plan premiums required as a result of actually adding the spouse and the spouse’s dependents to health plan coverage?

If so, the election change is permitted.

Does the employee wish to decrease his or her election to pay health plan premiums as a result of becoming covered under the spouse’s health plan?
And
Has the employee certified in writing that he or she has become covered under the spouse’s plan?

If the answers to these two questions are yes, the election change is permitted.

Does the employee wish to increase his or her Health FSA election as a result of acquiring a spouse and/or dependents through marriage?

If so, the election change is permitted.

Does the employee wish to decrease his or her Health FSA election as a result of becoming covered under the spouse’s health plan?
And
Has the employee certified in writing that the spouse has increased his or election under the Health FSA of the spouse’s employer?

If the answers to these two questions are yes, the election change is permitted.

Election Change Tool