Significant curtailment in health plan coverage

[alexa]

We are significantly redesigning our calendar year health plan effective 10/1/2002 (don't tell me; I've already suggested waiting until 1/1!)

We are eliminating all of our HMO's (50% of our workforce participate in these) and also

eliminating our POS and indemnity options. We will be going to 1 national PPO plan with single

and family coverage.

There will be greater employee cost sharing as well

My question has to do with our 125 plan.

We are allowing employees to opt out of coverage or to keep thier current coverage. Must we

allow them to go to single if they currently have married coverage? I assume that they can't go

from single to married snce that will cost more?

Also, what would a significant increase in cost be %wise? 20%?

I understand that they cannot change their health FSA election prior to next year's open

enrollment (1/1/2003)

Any insights into this would be greatly appreciated along with very good reasons to wait until 1/1/2003 to implement the new plan.

[Sandra Pearce]

As I interpret the permitted election changes for significant curtailment or loss of coverage, the only option the employee would have would be to drop the coverage.

[alexa]

Can you provide the cite.

Thanks

[KIP KRAUS]

Go to this web site and read section 1.125-4 for election changes.

http://www.125plan.com/FlexLinks.htm