IRS Issues Guidance Expanding Cafeteria Plan Election Change Rules

December 23rd, 2014 by JBWK

The IRS recently issued guidance allowing cafeteria plans to allow election changes mid-year in two
circumstances arising as a result of the Affordable Care Act. First, the guidance permits a
prospective election change if an employee’s hours drop below 30 hours per week. Second, the
guidance permits an employee to revoke a prior election to select coverage under the ACA’s health
care exchange. These rules are optional and plans are not required to adopt them. If employers are
interested in adopting these optional plans changed, the plan must be amended no later than December31, 2015.

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