Mid Year Dropping Out of Section 125 POP Plan

[Guest mander]

If an employee has medical coverage for himself and the premium is run through a Section 125 plan, can the employee in the middle of the plan year elect to drop his medical coverage without a qualifying event (and therefore stop the premium deductions under the Section 125 plan)?

[Mary C]

What does the SPD say? Are changes/cancellations allowed mid-year? Unless there is more information behind his request, the regs do not allow a partiticpant to cease contributions in mid-year without an event.

[GBurns]

The SPD cannot change a statutory requirement regarding the need for a qualifying event. So as MaryC points out, this employee needs an acceptable reason.

[QDROphile]

Even if the participant has a reason that is allowed under the regulations, a change will not be allowed if the plan document does not allow the change. The cafeteria plan is not required to be a flexible as the law. Among other reasons for this, the plan that provides the benefit might not allow the change.

I would refer to the plan document rather than the SPD.

[GBurns]

Good point. I stand corrected/amended.

[E as in ERISA]

Clients seem to be distrustful of two many blanket "NOs." So for some crazy reason the answer that seems to work best is: "Sure they can pull out of the medical plan at any time during the year for any reason. But they can't pull out of the 125 plan without of the qualifying event. So they can continue to make the contributions without getting the coverage....And then lose the unused contributions." And that seems to end the discussion.