An employee experienced a qualifying life change but did not notify us until the day after the required 30-day notification period had passed. Can we still allow this employee to make a change to their benefit elections based on the qualifying event?
There would be significant risk in allowing this employee to make a change after the notification period. An employer’s cafeteria plan document should clearly specify the time-frame in which qualifying event changes can be made. Cafeteria plans are subject to § 125 of the Internal Revenue Code, which requires employers to administer their plan according to the terms of their plan document.
Employers are cautioned not to make exceptions to the plan’s rules. In special cases, the employer may need to consider an exception but only after careful review of all facts and circumstances and discussion with legal counsel. For instance, if the employee had relied on incorrect or inadequate plan communications (including possible language barriers), the employer’s counsel may determine that it is appropriate to make an administration exception. Exceptions should be infrequent and case-specific, and the basis for deciding to make an exception should be documented in the plan’s records.
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