Match plan years with insurance renewal date

[bcspace]

Situation: Calendar plan year but insurance renews every March. The options as far as I can tell are:

1. Try to get the insurance company to to change their renewal date.

2. Just assume a lot of elections changes come March.

What the employer wants to do is either....

a) A short 2 month plan year and then do plan years from March to February to match insurance.

b) A long 14 month plan year and then match with insurance.

I don't think those last two are even feasable or allowable are they?

Any other options? The employer does not seem to want to do the first two but to my recollection, those are the best ways to handle it.

Thanks.

[LRDG]

Why and what kind of election changes do you expect in March?

If the concern is the possibility of insurance carrier rate increases that will result in premium increases to employees in March, Sec. 125 plan regs allows for premium increases or changes in premiums that are the result of carrier rate increases, without requiring employees to change their premium elections mid year.

Sec. 125 does not require a pro-active election by those employees experiencing premium rate increases/changes, it is recognized by the plan and should be accompanied by increase in P/R reductions.

Review your plan doc to assure that rate increases mid year are allowed and amend the plan doc before March if necessary to comply.

The premium change would not allow employees to change their Medical FSA (or DCFSA) elections without a qualified family status change.

IRS regs do no permit a plan year of more than 12 months.

The remainder of your options are not necesserily prohibited, but may not be necessary if the rate increase is your concern.

[bcspace]

Why and what kind of election changes do you expect in March?

If the concern is the possibility of insurance carrier rate increases that will result in premium increases to employees in March, Sec. 125 plan regs allows for premium increases or changes in premiums that are the result of carrier rate increases, without requiring employees to change their premium elections mid year.

It's just a premium change every March. They did not want to have to go through and change the amounts in the accounting software every March unless they synced it with the plan year for the cafeteria plan elections (MFSA, DCAP, etc.). The insurance company was unwilling to change their March date for premium changes. I think I convinced the client it was better to make March changes than to manipulate the plan year.

[GMK]

Jumping in a little late in the discussion,

changing the insurance renewal to January may not be a good idea, based on Jacmo's posts at the end of this link:

http://benefitslink.com/boards/index.php?s...renewal+january