Backup documentation for mid year election changes

[Guest Benmark]

When an employee has a status change and elects to change coverage in a Section 125 plan, is backup documentation required? If not, do we have any leeway? If we choose not to require backup, what negative consequences could this present?

[Guest Paul]

The Code and Regs do not require you to document the change. However, it is prudent to develope a form and have the employees sign it when they want to change. If the plan ever gets audited it will be good to have the back up. You ask what leeway you may have. The regs list the events that allow people to change their election. Either one of the events happened or it didn't. There is no leeway.

[Guest Benmark]

Paul-

Thanks very much for the response, however, I don't think I was entirely clear. We do have a form that an employee must sign to certify that a status change has occurred. What I was wondering was whether or not addition backup to that form was needed evidencing the status change (e.g., HIPPA certificate for an employee's husband showing that coverage ended under another plan).

Your thoughts?

[Mary C]

The newest regs say you can rely on the certification of the employee that the event actually happened. We have language written into the signature section of our form which states that and that if incorrect information is given, it could be considered fraud and grounds for discipline. It also states we reserve the right to request documentation, which we do in suspicious cases.