Normal Cafeteria Plan Mid-Year Election Change Rules Apply – For Now

As of the date of this post, there has been no legislation or IRS guidance allowing plan sponsors to permit cafeteria plan participants to make COVID-19 related mid-year election changes, other than those which also meet the current requirements of the employer’s cafeteria plan and applicable law.  However, employers may find themselves faced with an increase in employee requests to change their cafeteria plan elections in response to employees’ rapidly changing circumstances in light of COVID-19.

The table below highlights a few of the mid-year election change requests anticipated as employees and employers respond to the social distancing and economic impact of COVID-19.  Plan sponsors should confirm that their plan is not more restrictive than the general mid-year election changes permitted by law which are described here, and as with any mid-year election change request, a change is permitted only when it is consistent with the event and the terms of the plan.

Event Mid-Year Election Change Permitted?
Reduction in Pay Generally, No.

(A significant change in the amount that a participant is required to contribute towards coverage is a permitted mid-year election change event for coverage other than Health FSA coverage, but a change in a particular participant’s pay is not.)

Note:  If the reduction in pay also affects eligibility for coverage, a mid-year change could be allowed – but this scenario is unlikely.

Reduction in Hours Generally, No.


  • If the reduction in hours also affects eligibility for coverage, a mid-year change could be allowed.
  • If the plan permits a participant whose hours of service are reduced below 30 hours per week to drop employer-sponsored health coverage mid-year, the participant intends to enroll in another plan offering minimum essential coverage, and other specific conditions are met, a mid-year change could be allowed.
Furloughs Generally, No.  (To the extent that a furlough is treated as a leave of absence, the plan’s rules governing mid-year election changes in connection with leaves of absence will apply.)


  • If the furlough also affects eligibility for coverage, a mid-year election change could be allowed.
  • If the furlough also is an unpaid FMLA leave, a mid-year election change could be allowed.
Unpaid FMLA Leave of Absence Generally, Yes.
Paid FMLA Leave of Absence Generally, No.
Non-FMLA Leave of Absence (Paid or Unpaid) Generally, No.

Note:  If the leave of absence also affects eligibility for coverage, a mid-year election change could be allowed.  But the leave cannot be a “sham” for purposes of permitting the participant to make mid-year election changes.

Layoffs No.  A layoff is a termination of employment that will generally result in a loss of coverage and trigger other rights associated with losses of coverage due to termination of employment (e.g., COBRA continuation rights).

On another cafeteria plan note, there also has been no guidance or changes with respect to flexible spending accounts (FSAs), including: no changes to the annual contribution limits or reimbursement requirements for FSAs generally, no guidance allowing masks and disinfectant to be included as medical expenses eligible for reimbursement from a health FSA, and no guidance broadening the definition of dependent for determining expenses eligible for reimbursement from a dependent care FSA.

Employers should consult with their legal counsel on any specific questions about how mid-year election change rules and other cafeteria plan coverage rules apply to employment-related changes that are being contemplated in response to COVID-19.

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