Open enrollment periods in cafeteria plans

[dashab]

We have an employer that offers various insured benefits through their wrap cafeteria plan. Because the benefits are with different insurance carriers, the contract years are different. Because of the different contract years, the employer has different open enrollment periods for the various benefits it offers through the wrap cafeteria plan. So, for example, to enroll in medical insurance coverage, the open enrollment period begins in July for enrollments that take effect in September. For dental insurance coverage, the open enrollment is in May for enrollments that take effect in July. Does anyone know if the different open enrollment periods for benefits that comprise one plan are permitted under the cafeteria regulations? I have not yet found anything in the cafeteria regulations prohibiting this practice. Thanks for your help.

[LRDG]

Stagered open enrollment under Sec. 125 is permitted.

Sec. 125 regs limit mid-year rate changes resulting in higher Sec. 125 medical premiums to plans that are 100% insured. A self insured plan is prohibited from passing on mid-year rate increases to affected Sec. 125 participants. A mid-year rate increase to self insured Sec. 125 participants would be after tax until the next open enrollment.

The self insured limitation aside, the plan appears to be under unnecessary admin burden with multiple open enrollments. Considering the typical mishaps involved in open enrollment it seems higher risk and an admin burden.

[QDROphile]

Could you be a bit more specific and expansive about the statement that a self-insured health plan cannot increase rates for section 125 plan participants? The statement is followed by another statement that suggests rates can be increased, but the difference is not eligible for salary reduction. There are regulations that deal with mid-year rate increases. One of the possibilities is that a rate increase would not be included in the 125 plan until the next year. There are circumstances that allow a mid-year change of salary reduction election and it is possible to have an automatic salary reduction adjustment to match the health plan rate increase. I was not aware that self-insured plans are treated any differently than third-party insurance under the regulations.