IRS Regulations on Cafeteria-Plan Election Changes
IRC section 125 limits the extent to which participants in a benefit plan can make mid-year election changes. Below is a list of some examples of change-in-status events. As this list is not exhaustive, please contact Human Resources at 303-871-7420 or firstname.lastname@example.org for information specific to your event.
- Legal marital status. This would include marriage, divorce, legal separation, and annulment.
- Number of dependents. Includes any event that changes the number of an employee's dependents (e.g. adoption, birth, or death of a child).
- Employment status. Applies to the termination or commencement of employment for the employee, spouse or dependent.
- Work schedule. Includes any reduction or increase in hours of employment by the employee, spouse or dependent. Strikes, lockouts, and leaves of absence are specifically included.
- Changes that cause a dependent to become eligible for coverage or lose eligibility under the plan; for example, by reason of age or student status.
- Change of residence or work site by the employee, spouse or dependent.
- COBRA eligibility for employee, spouse or dependent (applies only to cafeteria-plan contributions to pay for COBRA coverage)
- Issuance of a family relations judgment, decree or order, such as a qualified medical child support order.
- Medicare or Medicaid entitlement for employee, spouse or dependent.
- Bona fide rehire of an employee during the same year as his or her termination (applies only to reinstatement of the benefit elections in effect before the termination).
Changes made with qualifying events must be consistent with the type of event.