Bukaty Bulletins

Employers have option to amend cafeteria plan allowing mid-year plan change for employees eligible for premium tax credits

Written by Bukaty Companies | November 3, 2022

In concert with the recently released IRS final rule, allowing more families to receive premium tax credits (PTCs) through Healthcare.gov, the IRS released Notice 2022-41. The notice allows employers to modify cafeteria plan rules to allow mid-year plan changes when an employee’s household is eligible for a PTC because employer-sponsored health coverage is unaffordable (premiums exceed 9.12% of household income). The notice is effective for elections on or after January 1, 2023.Traditionally, an individual enrolled in a cafeteria plan is unable to revoke health plan elections unless there is a change in status (reduction in hours, marriage, birth, divorce, death). The new special enrollment period created by the IRS notice allows employees with unaffordable household coverage to revoke elections for group coverage when the household is eligible for a PTC.

Employers interested in adopting the new IRS provision should work with their cafeteria plan administrator to amend their current plan document.

For additional information, contact your Bukaty benefits consultant at 913.345.0440.