Mid Year Premium Change

[nancy]

If an employer has a significant rate increase at policy renewal midyear, can an employee drop health coverage and therefore prospectively change the cafeteria health election on a prospective basis?

[papogi]

In the case of a significant cost increase, 1.125-4 allows an employee to revoke the current election, and move into another plan offering similar coverage, or cease coverage entirely if no similar coverage is available. Incidentally, no change is allowed to the current health FSA election.