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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

 

 

September 25, 2014

 

 Health and Welfare Law Alert

 

 

 

IRS Issues Guidance on Changes to Cafeteria Plan Election Rules

 

 

 

The IRS has issued guidance on the changes to the rules for when an employee can revoke health care coverage under a cafeteria plan to enroll in alternative coverage either under another plan that provides minimum essential coverage or through a Health Insurance Marketplace ("Marketplace"). In Notice 2014-55, the IRS has expanded the application of the permitted change rules for health coverage under a Section 125 cafeteria plan. In particular, Notice 2014-55 addresses two specific situations in which employees can now revoke their election for employer-sponsored health coverage outside the plan's open enrollment period (i.e., mid-year) to purchase alternative coverage.

 

Change Due to Reduction of Hours. The first situation involves an employee whose hours of service are reduced such that he or she is expected to average less than 30 hours of service per week (regardless of whether this results in loss of eligibility for coverage). The following two conditions must be met for an employee to be allowed to change his or her coverage election mid-year due to a reduction in hours of service:

  • The change in coverage must coincide with the intended enrollment of the employee (and all covered dependents) into another plan that provides minimum essential coverage.
  • The new coverage must be effective the first day of the second month following the month that includes the date the original coverage was revoked. 

Change Due to Enrollment in Marketplace Coverage. The second situation involves an employee participating in employer-sponsored health coverage who desires to revoke his or her prior election for such coverage to purchase Marketplace coverage during either a special enrollment period or annual open enrollment (without experiencing a period of duplicative coverage or a period of no coverage). The following two conditions must be met for an employee to be allowed to change his or her coverage election mid-year to enroll in Marketplace coverage: 

  • The change in coverage must coincide with the intended enrollment of the employee (and all covered dependents) into Marketplace coverage.
  • The new coverage must be effective the first day immediately following the last day of the original coverage that is revoked. 

Reliance on "Reasonable Representation." A cafeteria plan sponsor may rely on an employee's "reasonable representation" that he or she has enrolled (or intends to enroll) in alternative coverage. In other words, cafeteria plan sponsors do not have to require employees to provide actual proof of their enrollment in alternative coverage.

 

Plan Amendment Necessary to Implement New Changes. A plan amendment is required to implement the new permitted election change rules provided in Notice 2014-55. (Cafeteria plan sponsors should note, however, that adopting the new permitted election change rules is optional.) Such a plan amendment must be adopted on or before the last day of the plan year in which the new permitted elections are allowed. The amendment may be effective retroactively to the first day of that plan year, so long as the cafeteria plan is operated in accordance with the guidance provided in Notice 2014-55 and employees are notified about the amendment. In no event, however, may an employee make an election to revoke coverage on a retroactive basis.        

 

 

 

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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.