New Employee enrollment timeline

[Guest Winkler]

For our new employees (hired mid-year), the effective date of coverage for all benefits is "first of the month following employment". We have for years required that new employees turn in a completed election form, with any associated insurance applications, within 30 days of their date of hire.

Our medical plan is now saying that their rules are that the employee has 31 days from the effective date of coverage to turn in forms. Per their rules, an employee who starts work on March 2 would have until April 30th to get their paperwork in. This would be almost 2 months after the date of hire.

We think that if we followed the medical insurance plan's timeline, that we would be out of compliance with IRS.

Mid-year elections for new employees need to be "prospective" or within 30 days of hire if retroactive.

Are we correct? Or can we follow the timeline set up by the medical insurance plan?

[leevena]

Check your plan contract and you may see a 30-day grace period. This is not unusual. And as for the IRS, there is no requirement for this.

[QDROphile]

Distinguish between your health plan and your cafeteria plan. Your cafeteria plan may be the mechanism to elect health coverage. Although 30 days is a common window, it is not an absolute deadline under section 125. You are correct about prospective application, but that applies to the cafeteria plan salary reduction, and there is some fuzziness to the rulle.

[Guest Winkler]

Check your plan contract and you may see a 30-day grace period. This is not unusual. And as for the IRS, there is no requirement for this.

I have read the Cafe Plan Regs and info from EBIA. It looks to me that our only options are to either have the new employees elect benefits "prospectively" (prior to the effective date) or within 30 days of hire (if we want to retroactive coverage to 1st of month following hire date).

Am I missing something?