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Section 125 Premium Conversion (POP) Plans
Flexible Spending Accounts (FSAs)
Health Reimbursement Accounts (HRAs)

Status Changes and Qualifying Events

Once an employee begins to participate in a Premium Conversion Plan, the employee may not make changes to benefit elections unless one of the following qualifying events occurs to the employee, spouse or qualified dependent:

  • Marriage or divorce
  • Gaining a dependent (birth or adoption).
  • Losing a dependent (death or reaching maximum age for coverage).
  • Gaining or losing eligibility due to a change in employment.
  • Commencement or return from unpaid leave which effects eligibility.
  • Change in worksite that affects eligibility.
  • Legal separation, annulment, court orders, judgements or decrees.
  • Becoming eligible or losing eligibility for Medicare or Medicaid.
  • Change in residence which affects eligibility.

    The key is that there must be a change in eligibility to be considered a qualifying event.

    If one or more of these events occur:

  • The employee has 30 days from the date of the event to request a change in benefits.
  • The requested change must be "on account of" the qualifying event.
  • The requested change must be consistent with nature of the event.
  • The insurance company or benefit vendor rules must also permit the change.

    • The consistency rule makes sure the requested change is reasonable based on the nature of the event. For example, if an employee is married, the new spouse could become covered by the insurance plans (assuming the insurance company's eligibility requirements are met). If the employee becomes divorced, spousal coverage could be terminated. But without a rational explanation, the employee could not decrease life insurance due to a marriage, or birth of a dependent.

    All changes must be prospective, not retroactive. The employee's decisions must only affect future benefits, not past benefits. Typically, the effective date of a change would be the first day of the month following the date on which the employee made the election.

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