Common Mid-Year Qualifying Events and Employee Considerations
Employers offering fringe benefits under a cafeteria plan (also known as a Section 125 plan), must follow IRS rules about when benefits can be adjusted outside the annual open enrollment period. Most insurers offering group coverage only allow mid-year changes for these rules under the IRS. Employers don’t have to allow all mid-year election changes, only those allowed under the Health Insurance Portability and Accountability Act (HIPAA) special enrollment rights. This article reviews some items to understand about mid-year qualifying events.
What Is a Mid-Year Qualifying Event?
A mid-year qualifying event is a specific life change that allows a member to alter plan elections outside the group’s open enrollment period. Usually, elections for benefits like health insurance, dental coverage and flexible spending accounts (FSAs) are locked in for the entire plan year once open enrollment ends. However, the IRS recognizes that certain events may necessitate adjustments to your benefits.
When a mid-year qualifying event occurs, employees may be able to adjust benefit elections to suit their new circumstances. This flexibility ensures that benefits continue to align with their needs.
Common Mid-Year Qualifying Events
The IRS identifies the following “change in status” events that enable you to make alterations to your benefit elections during the plan year:
- Change in employee’s legal marital status (e.g., marriage, legal separation, divorce/annulment or death of a spouse)
- Change in number of dependents (e.g., birth, death or adoption of a child)
- Change in employment status (e.g., starting or losing a job, working at a different site or transitioning from part time to full time or vice versa)
- Change in dependent status (e.g., when a child reaches the age limit for dependent coverage)
- Change in place of residence (e.g., if your family moves to a new location that affects your eligibility for a health maintenance organization plan)
Additionally, employees may be allowed to adjust benefits if there are changes in cost or coverage for their plan’s qualified benefits. Other mid-year qualifying events that may prompt changes include court orders (such as those requiring the addition of a dependent to a health insurance plan), qualifying events under the COBRA, HIPAA special enrollment rights, gaining eligibility for Medicare or Medicaid, Family and Medical Leave Act leave, and Health Insurance Exchange enrollment.
Qualifying Events may allow the employee to do the following:
- Add or remove dependents
- Enroll in or drop coverage
- Change plan options
- Adjust coverage levels
While the group health plan must follow IRS rules for mid-year election changes, an employer might set stricter limits on when employees can adjust benefits. If the plan allows mid-year changes, make sure you understand which qualifying events are covered and know that these changes might be more restrictive depending on the plan’s specifics. It’s also important to note that some mid-year changes apply only to certain benefits like health FSAs, and not all IRS-approved changes are available across all benefits.
There is also a strict deadline for changes to be submitted to an insurer. Most only allow 30 days from the date of the qualifying event to modify elections.
SPECIAL NOTICE: Regarding Mid-Year Qualifying Events for Employers
Many medical carriers are now requiring proof of qualifying events in order to make changes. If you update eligibility online, be prepared to upload relevant proof of the life event or the carrier may not approve the requested change. Carriers that require this now are: MMO, UHC, Paramount, and Aetna.
Speak with your ARC client advisor to learn more about qualifying events. We have a flyer that can be posted in a breakroom, used as a payroll stuffer, or included in open enrollment materials.
