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New Guidance for Section 125 Mid-Year Election Change Rules

Section 125 Mid-Year Election Change Rules

1.5 minute read

The IRS has relaxed mid-year election change rules for fully insured and self-insured employer sponsored health coverage, FSAs, and DCAPs for 2020. The changes are designed to allow employers to respond to changes in employee needs because of the COVID-19 pandemic.

For a health FSA or DCAP, participants can revoke their elections, increase or decrease existing elections, or make new elections.

For employer-sponsored health coverage, a Section 125 cafeteria plan may permit an employee to:

  • Revoke an existing election if the employee is or will be enrolled in other health coverage
  • Make a new election if the employee previously declined coverage
  • Revoke an existing election and enroll in different health coverage sponsored by the employer

A plan may permit any of the election changes described in the Notice 2020-29, regardless of whether they satisfy existing mid-year election change rules.

Employers using this relief may determine the extent to which such changes are permitted and applied. For changes implemented, the employer must adopt a plan amendment by December 31, 2021. The amendment may be retroactive to January 1, 2020. Employees must also be notified of these changes.

Download the bulletin for more details.


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This blog is intended to be a compilation of information and resources pulled from federal, state and local agencies. This is not intended to be legal advice. For up to the minute information and guidance on COVID-19, please follow the guidelines of the Centers for Disease Control and Prevention (CDC) and your local health organizations.


National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Mike Strobl

Mike Strobl

Mike Strobl sees goodness everywhere he looks. One reason he joined National Insurance Services (NIS) was because he saw how they treat their customers, their employees, and the community, and how they continually strive to be better. Mike tries to embody the golden rule, “Treat others as you would like to be treated.” As a Retirement Income Account Representative, Mike services 403(b) Special Pay Plans and HRAs (Health Reimbursement Arrangements). Mike is a licensed Health and Life Insurance agent and a Registered Securities Representative with his series 6 and 63 licenses.