While it’s optional for employers, many will likely opt to allow employees to make mid-year health plan changes since so many have had their lives upended in 2020, as the IRS gives the go-ahead in a new coronavirus-related ruling.
Normally, employees are prevented from changing their health insurance plans after the open enrollment period ends in December, unless a qualifying life event allows for such a change.
However, for all the employees who were blindsided by the coronavirus, the IRS is offering the option to employers, but only for 2020. The new IRS ruling allows employees to make the following changes to their health plan:
• enroll in their employer’s health plan, even if they’d previously declined
• switch health plans
• change from single to family coverage, or vice versa, and
• add more family members.
Many couples opt to be covered under one plan if they have children. If, during the pandemic, one parent loses employment, “the cost of family COBRA is likely to be much more costly than changing to the working spouse/parent’s employer-sponsored plan,” said Julie Stone at HR consultancy Willis Towers Watson.
Changes to FSAs too
Under the new IRS ruling, employers may also allow changes to health FSAs and dependent care FSAs (used to fund caregiving expenses with pretax dollars). Employees are allowed to enroll, drop coverage and increase/decrease payroll-deducted contributions in 2020.
While offering mid-year election changes does put more administrative burdens on Benefits pros, they have the option to allow any or all of these changes.
However, employers may want the flexibility of making changes to encourage reluctant employees to return to work, said Cynthia Cox, VP at Kaiser Family Foundation, a health research group.