Mid-Year change in insurance election (ie -from PPO to HMO)

[Guest Amy Erlbacher Anderson]

Can a participant under a cafeteria plan that offers pre-tax premium payment change health insurance from coverage under the HMO offered by the employer to the PPO offered when the premium costs for the two plans are different? (No Regulatory change in status has occurred) Also note that the plan year is April to March, but the period for changing coverage under the insurance policies is September

[This message has been edited by Amy Erlbacher Anderson (edited 06-11-99).]

[SLuskin]

I think the first thing that needs to be done is amend the plan so that the open enrollment periods of the health insurance plan and the Section 125 Plan are the same. Otherwise, you can't help but violate something during health ins. open enrollment.

[Joe Priselac]

Amy,

I agree with SLuskin that you should coincide the open enrollment for health insurance with the Cafeteria Plan anniversary. You can allow an employee to change health insurance plans off anniversary. The employee can not change the amount that is being withheld from their paycheck on a pre-tax basis. If the employee changes to a more expensive plan, the increase in the salary deduction must be withheld after-tax. If the employee changes to a less expensive plan, the deduction amount stays the same and the unused dollars are forfeited.