Election changes

[Guest cpizzuti]

We have a cafeteria plan with reimbursement for medical expenses.

As usual, we obtained elections for all participants prior to 1/1/02 for the 2002 plan year. Elections were made based on our health coverage in 2001.

On 1/7/02 we were informed that there are increases to the deductibles, co-pay and co-insurance amounts for 2002, and several employees want to change their payroll deduction amounts.

The way I read the regs (including the new ones from 2001) we are out of luck as far as making this type of change.

Does anyone have another opinion?

[Lisa Hand]

No.

[mroberts]

If you feel that the changes are significant and were not indicated prior to the open enrollment period I would tend to think that you could allow your employees to make some changes. Their decisions were based on your previous health plan coverage, not the new one. It really depends a lot on the events leading up to 1/7/2002. Such as, how many health plans do you offer, what the changes were and so forth...

If you would like to discuss further, just drop me an email.

Thanks,

Matt

matt.roberts@bbinsurance.com

[SLuskin]

I think the regs are pretty clear that you can't change the medical FSA due to a change in the employer-provided health insurance benefit. You can change the dollar amount of the premium, and you can choose other insurance if available, but not the flexible spending accounts.

Same idea holds here. Say an employer adds a new dental insurance benefit mid plan year. An employee has elected a certain amount based on dental needs, and no insurance. If the employee elects the dental insurance, then she would no longer need such a large amount in the medical FSA. She still can't change the election.