In recent months, many plans have changed the renewal dates for group health coverage and various other benefits offered to employees under their Section 125 cafeteria plans. Plans should consider a number of compliance issues raised when changing plan years. Here is a sampling of issues that plans should address:
- The plan legal documents should accurately reflect the renewal date(s) currently used by the plan for the various benefit options. Contact your ProBenefits administrator to receive an updated SPD if your plan changes renewal dates.
- If possible, a best practice for plans is to align the renewal dates for all benefit options offered under the plan. Aligning all renewal dates will avoid a number of potential issues in the future with employee elections and plan design changes.
- Some plans are extending the current medical plan year beyond the 12 month coverage period. Because the plan documents generally outline a 12 month plan year or shorter in some circumstances, plans should allow participants to make election changes at both (1) the previously scheduled year end and (2) the start of the newly adopted plan year. This approach avoids a period of coverage in excess of 12 months.
- Caution should be used when amending the renewal date of your FSA plan. Generally, an FSA plan year should not be terminated early due to potential forfeitures under the use-or-lose rule. If your plan decides mid-year to renew the group health plan early and you would like to align the FSA plan year with the group medical plan year, contact your ProBenefits administrator to discuss your options.
Lastly, the next installment of our 2014 Webinar Series will air on Tuesday, March 25. The webinar, titled What Employers Need to Know about Summary Plan Descriptions ("SPDs"), will cover a number of important topics, including SPD content, updates, and distribution. Check back to our website soon to find the webinar invitation and registration details.