Effective Date of Election Change

[Guest SCUDDESLER]

Is the following permissible with respect to a cafeteria plan:

An eligible employee may make an election to participate within 30 days of employment, the election becomes effective retroactive to the employee's date of hire and the employee's salary is reduced after he makes the election to pay for the retroactive and prospective coverage.

Suppose a cafeteria plan permits an employee to change his elections mid-year due to a status change event if he/she submits a new election form within 30 days of the event. May the new election be effective retroactive to the date of the event (especially in light of the modification made to Example 2 in the January 10, 2001 final cafeteria plan regulations)?

[SLuskin]

The only retroactive thing permitted in a Cafeteria Plan is the HIPAA reg regarding adding newborns retroactive to date of birth. All else must be prospective - generally effective the pay period following the date of the election form or change in status form.

[Guest Matt J]

Is it not true that the coverage can be retroactive to the date of the event, but the payroll deduction should be prospective in all non-HIPAA events? Of course, the employer would have to pay for the full premium for that period of coverage between the retro date and next payroll.