125 status change

[Guest GuyHocker]

I read that a "change in residence" qualifies as a change in status. If an employee moves, but insurance coverage does not change, does this qualify as a change of status such that his medical spending account election can be changed?

[Guest]

In order to make a mid-year election change to a cafeteria plan, there must be a change in status and any change made pursuant to that change in status must be consistent with such change. In your situation, the participant changed his/her residence. This is a change in status that qualifies under the Code. However, you stated that the insurance did not change (I assume that means that you did not lose coverage due to the move). As such, no change is allowed as it would not be consistent with the status change.

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[Guest GuyHocker]

I understand. The participant states that the new address requires he change doctors for the kids, the new doctor is more expensive, so the MSA estimate is too low. Does this change your answer?

[SLuskin]

You cannot change the medical fsa either up or down in this circumstance. Only the group health insurance premiun. The other thing that you can now change according to the new regs would be the daycare, if moving caused you to enroll in a different daycare center and the price was different from your previous center.