Change in Coverage

[Guest perplexedbypensions]

Company offered AFLAC insurance for dental benefits to employees on pre-tax basis. Not required, or a group plan.

Company is now offering employees a group dental plan.

AFLAC is still available to those who want extra coverage. Some employees would like to drop their AFLAC coverage since the group dental plan will now be enough coverage for them.

AFLAC has stated that they think that the employees can not stop coverage mid-year, but would need to wait until the next enrollment period to stop coverage. They told the employer that before anyone cancelled their coverage, they (the Employer) should be certain that they were allowed to do this mid year.

My thought is that since one plan is not replacing the other, employees cannot change mid-year.

Does anyone know if this is true?

THANK YOU!

[oriecat]

1.125-4(f)(3)(ii)

ii. Addition (or elimination) of benefit package option providing similar coverage. If during a period of coverage a plan adds a new benefit package option or other coverage option (or eliminates an existing benefit package option or other coverage option) the cafeteria plan may permit affected employees to elect the newly-added option (or elect another option if an option has been eliminated) prospectively on a pre-tax basis and make corresponding election changes with respect to other benefit package options providing similar coverage.

[Guest perplexedbypensions]

Thank you Mr. Cat.

Would this be the same if the AFLAC coverage was not Cafeteria plan, but was simply started as the result of a salesman paying a cold call and signing up employees? Or, does the fact that the employer agreed to collect payments pre-tax and then write a company check to AFLAC make them a cafeteria plan without them even knowing they have one?

Thank you again!

[oriecat]

If you're collecting the premiums with pre-tax dollars, you best have some sort of Section 125 plan in place, even if just a POP.

And it's Ms Cat.

[Guest perplexedbypensions]

Thank you again Ms. Cat. I appreciate the help. Have a great weekend!