Is a Cafeteria Plan required to be based on a calendar year?
A. No. Nothing in the code or regulations requires that a Cafeteria Plan be on a calendar year basis. If the only benefit provided through a Cafeteria Plan is group medical insurance, we would recommend that the Cafeteria Plan year coincide with the medical benefit plan year so that elections to pay for premiums through the Cafeteria Plan will coincide with elections to participate in the medical plan. If the Cafeteria Plan has dependent care benefits or non-reimbursed medical expense benefits, we suggest establishing the Cafeteria Plan on a calendar year basis because participants tend to think in terms of a calendar year when determining their anticipated expenses. FSA Rules Q.
