The IRS recently released welcome additions to the permitted election changes for health coverage under the IRS Code Section 125 Cafeteria Plan mid-year election change rules. The guidance, released as IRS Notice 2014-55, solves an election lock problem that has been facing employer-sponsored non-calendar year plans since the opening of the Federal Marketplace (aka Exchange).
Under the current rules (Treas. Reg. § 1.125-4), an employee is not permitted to revoke an election under the group health plan mid-year solely to enroll in a plan through the Marketplace. For employees participating in an employer-sponsored calendar year plan, this was not an issue. An employee could explore and enroll in a Marketplace plan during the open enrollment period, and begin Marketplace coverage on January 1st, just after the expiration of the employer-sponsored plan. Employees participating in an employer-sponsored non-calendar year plan were not so lucky.
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Under the current rules (Treas. Reg. § 1.125-4), an employee is not permitted to revoke an election under the group health plan mid-year solely to enroll in a plan through the Marketplace. For employees participating in an employer-sponsored calendar year plan, this was not an issue. An employee could explore and enroll in a Marketplace plan during the open enrollment period, and begin Marketplace coverage on January 1st, just after the expiration of the employer-sponsored plan. Employees participating in an employer-sponsored non-calendar year plan were not so lucky.
Click here to continue reading.
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