Can EE revoke an election change?

[Guest kjk]

An employee requested a mid-year election change on account of her marriage and picking up coverage under her new husband's health plan. She now wishes to rescind that election change and continue her coverage under our health plan. Is this okay? (Our plan includes all of the status change rules set out in the regulations). Also, we have an administrative rule (clearly communicated) that employees must advise HR of a status change within 30 days in order to make a change--can this employee only rescind her election and resume her old election if it is within those 30 days? Can you cite authority for your answer? Thanks.

[GBurns]

I do not remember ever seeing anything of authority on this issue except for general IRS employee comments about administrative or other errors. As a result I would look at this in the same way that I would look at an employee who made a choice at Open Enrollment in say November for effective date January 1 and who then changes his/her mind in late December before any payroll deductions are made or cards etc issued. I would advocate allowing an employee to change their election since neither coverage nor the salary reduction have yet become effective. So the change really is not governed by any rules as yet, just administrative procedures and precedent.

[jsb]

As per GB, if the change has not yet gone into effect I believe it can be rescinded. But if it has gone into effect, I think you're stuck.

It would get sticky if you were still within the original 30 days and the plan change was effective. You would still be within 30 days of a qualifying event, but part of the rule is that the change requested must be consistent with the event. Marriage might provide you with access to new coverage, so it would be consistent to allow a change based on acquisition of that new coverage (ie. drop your employee only coverage through your own employer). But if you didn't take the new coverage, dropping your employer's coverage would fail a consistency test. Similarly, dropping your coverage (which went into effect) under the new spouse's plan in order to pick up your individual coverage under your own employer's plan might also fail the consistency test.