The IRS announced two new situations in which a participant may revoke his or her cafeteria plan election in order to purchase coverage through a marketplace (Exchange) established under the ACA. These provisions do not apply to FSAs. Change is permitted provided:
Employee Enrolls in Marketplace Coverage
- The employee is eligible for a special enrollment period during the Marketplace’s annual open enrollment period; and
- The employee enrolls in Marketplace coverage, effective immediately following the last day of the employer’s coverage.
Reduction in Hours of Service
- The employee changes from full-time status to part-time status (i.e., reasonably expected to average less than 30 hours per week), even if the reduction in hours does not result in the employee ceasing to be eligible under the group health plan; and
- The employee enrolls in another plan that provides MEC, effective no later than the first day of the second month following the month the original coverage is terminated.
Cafeteria plans must be amended to provide for the new permitted election changes in accordance with the guidance under Notice 2014-55.