Once again, the IRS is seeking to increase access to federal Health Insurance Exchange coverage… this time, by offering greater flexibility to sponsors of cafeteria plans. 

As explained in Notice 2022-41, the IRS has expanded the change-in-status rules for health coverage under certain cafeteria plans. The change allows an employee to make a prospective midyear group health plan election change from family to employee-only coverage in order to obtain coverage from an Exchange, provided the following two conditions are met:

  1. One or more family members are eligible for a special enrollment period to enroll in coverage through an Exchange, or one or more family members seek to enroll in coverage during the Exchange’s annual open enrollment period; and
  2. The revocation of the election of the group health plan family coverage corresponds to the intended enrollment of the family member(s) in a qualified health plan through an Exchange for new coverage that is effective no later than the day immediately following the last day of group health plan coverage.

The notice originally only applied to non-calendar-year plans; however, the IRS later posted a revised version of the guidance (Notice 2022-47) that removed the non-calendar-year plan limitation.

If your health package offers a cafeteria plan, you have the option to add this change-in-status event, which would be effective for elections made prospectively on or after January 1, 2023. Just contact your Account Management team.

Should you have any questions, please call Director of Administration Sharon A. Mills at (800) 423-3151, Ext. 438 or smills@medben.com.