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"Change in Status" event

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If a legitimate "change in status" takes place during the plan year, is there a specific timeframe by which the employee must make a change in election? I'm looking at a document that was done in 2008, and it doesn't specifically address this question. I presume it must be prospective only, and can't be retroactive?

As an aside, does a new union contract effective during the plan year constitute a "change in status?" Seems like it should if it changes the level of benefits/reimbursement with regard to health insurance, and maybe this is contemplated under 1.125-4(f), but it isn't specifically listed under 1.125-4(c)... and could a health FSA election be changed in this circumstance? I'm thinking I saw somewhere that it can't.


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There is no specific timing requirement for making election changes as long as they are "consistent with and are account of" the change in status.  Most cafeteria plans have a set time period (e.g., 30, 45, or 60 days) and, if so, plan administrators have to follow this time frame when administering election changes.  If there is no time frame in the plan, I suppose (in the very unlikely event it is challenged by the IRS), an employer can argue that the change was permitted because it met the consistency requirement but the IRS might find that any request made 60 days or later from the time of the event did not do so.

In general, election changes must be prospective except in the case of HIPAA special enrollment rights, which in certain cases may be retroactive.

I suspect without looking that entering a new CBA would NOT, by itself, permit an election change.  If the new CBA caused one of the other events to occur (e.g., change in cost, etc.) the election change should be permitted on those grounds.  

I can think of no situations where a health FSA election can be changed due to a new CBA.

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The relevant standard is that the election change must be on account of the status change.  At some point the election change is questionable in its relation to the status change because it is no longer proximate in time.  Certain changes have prescribe deadlines (HIPAA).  Plan administrators are wise to prescribe deadlines so they do not need to make uncomfortable determinations or get into administrative messes.

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