Refresher on Those Events Permitting Election Changes Mid-Plan Year

July 2023

The Group Health Plan may be drafted to permit an individual to change an election mid-year based on a permitted event. Alternatively, a plan sponsor may design the plan so that individuals are not allowed to modify their elections or may make only certain modifications.

While determining what modifications to allow, the plan sponsor must follow these guidelines. The guidelines are allowed based on Section 125 rules, HIPPA rules, COBRA guidelines, etc. The allowed changes are listed below.

Under Section 125 of the Internal Revenue Code

The Internal Revenue Service (IRS) provides specific instances when an employee can make midyear election changes:

Change in marital status.

Change in number of dependents.

Change in employment.

Change in dependent eligibility due to plan requirements (e.g., loss of student status, age limit reached).

Change in residence (e.g., employee or dependent moves out of plan service area).

Significant cost changes in coverage.

Significant curtailment of coverage.

Addition or improvement to benefits package option.

Change in coverage of spouse or dependent under another employer plan (e.g., spouse's employer had no insurance coverage before but now offers a plan).

Loss of certain other health coverage (e.g., plans provided by governmental or educational institutions).

Health Insurance Portability and Accountability Act (HIPAA) special enrollment rights.

Judgments, decrees or orders.

Entitlement to Medicare or Medicaid.

Change in hours worked to less than 30 hours per week on average if the employee and covered family members enroll in another plan providing minimum essential coverage.

Enrollment in a marketplace exchange plan during an exchange special or open enrollment period. Employees and others covered must enroll in the exchange plan by the first day after coverage ends under the employer plan.

Individuals who lose group health plan or health insurance coverage

Acquisition of a new spouse or dependent by marriage, birth, adoption, or placement for adoption

Individuals who lose or become eligible for Medicaid or CHIP coverage

Death of a covered employee

Covered employee’s termination or reduction of hours of employment

Covered employee becoming entitled to Medicare

Divorce or legal separation from the covered employee

Dependent child ceasing to be a dependent under the requirements of the plan

Judgements, Decrees, or Orders

A judgement decree, or order resulting from a divorce, legal separation, annulment, or change in legal custody that requires accident or health coverage for an employee’s child or for a foster child who is a dependent

Health Savings Account (HSA)

Election changes allowed prospectively on a monthly basis (future changes)

Individual Plan Enrollment

Participants are permitted to revoke elections from employer-sponsored group health plans due to a reduction in hours even if there is no loss in eligibility (during the look-back measurement ‘stability’ period) if employee indicates intention to enroll in another minimum essential coverage plan (group or individual coverage)

Participants are permitted to revoke elections for employer-sponsored group health plan if the participant chooses to enroll in an individual health plan through the public Marketplace during the annual open enrollment period or a special enrollment period

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. Readers should always seek professional advice before entering into any commitments.