On May 12, 2020, the IRS released Notice 2020-29, which provides temporary flexibility for mid-year election changes under a Section 125 cafeteria plan during calendar year 2020. The changes are designed to allow employers to respond to changes in employee needs as a result of the COVID-19 pandemic.
This guidance relates to mid-year elections for self-insured and fully insured employer-sponsored health coverage, health flexible spending arrangements (health FSAs) and dependent care assistance programs (DCAPs).
For employer-sponsored health coverage, a Section 125 cafeteria plan may permit an employee to prospectively:
Make a new election if the employee previously declined coverage;
Revoke an existing election and enroll in different health coverage sponsored by the employer; or
Revoke an existing election, if the employee is or will be enrolled in other health coverage.