Adding like benefits mid-plan year

[Guest aearle]

Can new benefits be added to a Sec 125 plan during the plan year even if similar benefits are already being offered under the plan? I am particularly interested in how this relates to non-core benefits (vision, voluntary health or disability coverages, etc.). If the new benefits can be added on a pre-tax basis, can employees already participating in the similar benefit change to the new benefit if the new benefit is deemed to be a significant improvement in coverage or significant decrease in cost? Thanks!

[Kirk Maldonado]

Had you considered terminating the existing plan year and starting a new one. (There are complications to this approach.)

[papogi]

aearle, based on my reading of 125-4, employees in your situation can elect the new option regardless of their current election. Those who have opted out of similar coverage in the past may elect the new coverage. Further, employees currently in similar coverage may drop their current election and opt for the new benefit. In fact, it doesn't even have to be significantly better. If you read 125-4(f)(3)©(iii) closely, it gives eligible employees in your situation free reign to elect the new option.

[Guest aearle]

Thanks very much, papogi! As usual, you are a great source of information. I have found and read the section and see what you are saying.