New insurance, higher deductible

[bcspace]

Employer is changing insurance companies. Premiums might be about the same or lower. However, the deductible will be much higher (there was no deductible previously).

My understanding is that this is a valid change of election event for the premium, but not for any medical FSA's. Is that correct or may a participant also change their medical FSA's to cover the increased deductible?

[LRDG]

That's correct, IRS wrote regs to automatically recognize medical insurance plan premium changes in a Sec. 125 plan without the necessity of participants having to make new elections. However, according to IRS regs the plan is prohibited from allowing Medical FSA election changes that are on account of deductible or co-pay changes under the insurance plan.