Some employers maintain a cafeteria plan under section 125 of the Internal Revenue Code to allow employees to pay for health and welfare benefits with before-tax dollars. The rules under section 125 of the Code provide that as a condition of paying for benefits with pre-tax dollars, employees cannot change their benefit elections during the plan year unless they experience a qualifying life event (QLE) recognized under Code section 125 and the terms of the plan. Examples of QLEs include a change in legal marital status (marriage, divorce, death of a spouse, legal separation, annulment); number of dependents (birth, adoption, death); employment status affecting eligibility (full-time/part-time employment, termination or commencement of employment, strike, lockout, return from unpaid absence); or a change in eligibility of a dependent (child ages out of the plan). The rules also require all election changes be consistent with the QLE.
Employers should confirm that their plan documents identify Qualifying Life Events and permissible election changes consistent with the Internal Revenue Code. HR Benefit Administrators should have procedures in place to administer employee life events with consistency. These procedures may include items such as identifying QLEs in an easy-to-reference matrix of Qualifying Life Events and processes for collecting documentation of life events (e.g., birth certificate, marriage license, etc.).
MyEnroll.com can make the QLE administration process easier. The self-service Life Event Module in MyEnroll.com includes
- Employees may self-report life events;
- Employees may upload substantiating documents directly to MyEnroll or fax the documents to BAS;
- Permissible benefit election changes in MyEnroll are limited to only those options consistent with the life event, and are customized to the plan document;
- Benefit election changes pend until a final determination from the HR Benefits Administrator is provided;
- HR Benefit Administrators can review requested benefit election changes and make decisions to approve, decline or request more information;
- Reporting capabilities provide HR Benefit Administrators and Department Managers with the tools needed to keep the process moving and avoid administrative delays or errors.
If you would like more information about the Life Event Module available through MyEnroll.com, please contact your Account Manager or Sales@BASusa.com.