When can a cafeteria plan permit changes in participant elections?
A. Generally, cafeteria plans may not permit participants to make mid-year election changes unless a change in status event is the cause of the proposed change and the proposed change is consistent with the event. If the employee experiences a change in family status, the employee will be permitted to change or revoke an election during a plan year. Changes in family status include changes in legal marital status, employment, residence, and the number of a participant’s dependents. In addition, when the cost of one option significantly increases, the cafeteria plan may permit participants to revoke this option and make a corresponding election change with respect to other benefit package options, but only on a prospective basis. If an employer adds a new benefit option with similar coverage, affected employees can change their elections under the plan if the plan language permits such a change.
