Gulfshore Insurance > Gulfshore Blog > COVID-19 > Client Alert: New COVID-19 Guidance for Section 125 Mid-year Election Change Rules

Section 125 Mid Year Election Change

The IRS has relaxed the mid-year election change rules under a Section 125 cafeteria plan during calendar year 2020. The changes are designed to allow employers to respond to changes in employee needs as a result of the COVID-19 pandemic.

Permitted Election Changes
For employer-sponsored health coverage, a Section 125 cafeteria plan may permit an employee to prospectively:

  • Make a new election if the employee previously declined coverage;
  • Revoke an existing election and enroll in different health coverage
    sponsored by the employer; or
  • Revoke an existing election, if the employee is or will be enrolled in
    other health coverage.

 

Employees may also prospectively revoke an election, make a new election or decrease or increase an existing election for a health FSA or DCAP. A plan may permit any of the election changes described in the notice, regardless of whether they satisfy existing mid-year election change rules.

Click here to download the legal update

We will continue to share information as it becomes available and keep you informed.

Ryan Laude is a Client Advisor at Gulfshore Insurance specializing in employee benefits. Ryan works with a wide range of businesses to create the best funding options that fit their needs. Comments and questions are welcome at rlaude@gulfshoreinsurance.com