Election Change

[Chaz]

Is the termination of Marketplace coverage (due to nonpayment of premiums because of a loss of subsidy) a qualifying change in status event permitting an election change (i.e., adding medical coverage under an employer plan) under the cafeteria plan rules?

[GMK]

As far as I've been able to find, no.

[Chaz]

That's my interpretation too. Unfortunately, a representative of healthcare.gov thinks otherwise.

[KJohnson]

If you are a large employer under ACA and have a non-calendar year plan you can incorporate a special rule for the Plan Year beginning in 2013 (and ending sometime in 2014) where an employee does not need to have a change in status.

(1) An employee who elected to salary reduce through the cafeteria plan for accident and health plan coverage with a fiscal plan year beginning in 2013 is allowed to prospectively revoke or change his or her election with respect to the accident and health plan once, during that plan year, without regard to whether the employee experienced a change in status event described in § 1.125–4; and

(2) An employee who failed to make a salary reduction election through his or her employer’s cafeteria plan for accident and health plan coverage with a fiscal plan year beginning in 2013 before the deadline in proposed § 1.125–2 for making elections for the cafeteria plan year beginning in 2013 is allowed to make a prospective salary reduction election for accident and health coverage on or after the first day of the 2013 plan year of the cafeteria plan, without regard to whether the employee experienced a change in status event described in § 1.125–4.

An applicable large employer member that wants to permit the change in election rules under this transition relief for fiscal plan years must incorporate these rules in its written cafeteria plan. Pursuant to proposed § 1.125–1©, a plan may be amended at any time on a prospective basis. Notwithstanding the general rule that amendments to cafeteria plans may only be effective prospectively from the date of the plan amendment, a cafeteria plan may be amended retroactively to implement

these transition rules. The retroactive amendment must be made by December 31, 2014, and be effective retroactively to the date of the first day of the 2013 plan year of the cafeteria plan.

[Chaz]

The plan at issue is a calendar year plan so this would be inapplicable. The problem here is not a plan year issue, it is the fact that the government's determination of whether the individual is eligible for a subsidy takes longer than the plan's initial enrollment period.