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IRS Guidance Allows COVID-19 Section 125 Qualifying Event Changes


On May 12, 2020, the IRS released Notice 2020-29, which provides temporary flexibility for mid-year election changes under a Section 125 Plan during calendar year 2020. The changes are designed to allow employers to respond to changes in employee needs as result of the COVID-19 pandemic. 

Qualifying Event Permitted Changes:
  • Enroll in coverage if the employee previously declined coverage
  • Revoke an existing election and enroll in different coverage sponsored by the employer
  • Revoke an existing election if the employee is or will be enrolled in other health coverage
Affected Plans:
  • Group health, prescription drug, dental and vision plans
  • Health FSAs
  • Dependent Care Assistance Programs (DCAPs)
The permitted changes are optional for employers.  Should an employer choose to allow the new permitted changes/qualifying event, the Section 125 Plan Document should be amended by December 31, 2021. 

Additional information about the IRS guidance can be found here.  If your organization is interested in allowing the new qualifying event permitted changes or have questions regarding the recent guidance, please contact your Seubert representative. 

 


Seubert & Associates, Inc. is prohibited from providing legal or tax advice, the information contained in this email should not be interpreted as such.  Please contact counsel or your tax preparer for advice.   A response to this email goes to an unmanned email box.

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