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IRS Notice Changes Cafeteria Plan Election Rules

(posted: September 30th, 2014)

The IRS issued Notice 2014-55, effective September 18, 2014, adding to the cafeteria plan election rules.

What It Means For Participants

Employees covered by their employer's cafeteria plan now have two additional reasons to change their health insurance plan elections during a plan year:

  • If an employee's hours were reduced to fewer than 30 hours (on average) per week and the employee is still eligible for the employer's health plan coverage.
  • If an employee wants to stop participating in the employer's group health plan and instead purchase coverage through an ACA marketplace.

What It Means For Employers

As an employer you will need to amend your cafeteria plans to reflect these changes before the last day of the plan year in which elections are allowed. The amendments may be effective retroactively to the first day of your plan year if your cafeteria plan follows the above guidance and you have communicated these amendments to plan participants. For plan years beginning in 2014, employers can amend the plan at any time before the last day of the plan year beginning in 2015.

The full text of IRS Notice 2014-55 can be found here as a PDF.

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