Question of the Week

Q.- Our plan year starts 1/1/2020 and we held open enrollment in November. Employees pay for coverage with pre-tax dollars. An employee has just asked if she can change her FSA election and her medical plan election because she just learned she will be needing surgery. Should we let her do this?

A.- Probably not, unless she has a qualified mid-year life event recognized by the IRS as allowing an election change. Even though the plan year just started, the IRS only allows changes to cafeteria plan elections for certain specified mid-year change events. Learning that more medical expenses are expected is not a recognized mid-year life event. If pre-tax salary reductions have not yet been withheld from pay, there may be some wiggle-room, but you should talk with your legal advisor before allowing an election change for the reason presented.

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