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Cafeteria Plan Training Excerpts

Receiving, Processing, And Handling Status Changes

The plan administrator is responsible for verifying that a status change event claimed by the employee actually occurred.

Plan administrators also must determine that the event is one of the status changes allowed under Cafeteria Plan rules, and that the requested election change is consistent with the status change.

Cafeteria Plan materials provided to all plan participants should include a status change request form. This form should include a statement that the employee is revoking his previous election, and/or electing new benefit plans or changing benefit levels (e.g., for an HFSA).

Additionally, the statement should include that the employee authorizes the employer to make a corresponding salary reduction, if required, for the benefits being elected.

The status change form should be signed and dated by the employee. The date the status change occurred should be included.

Once the employee submits the form to the plan administrator, he or she can determine whether the requested change to the election is consistent with the status change. If more information is necessary, the plan administrator should contact the employee and the employee should be given an opportunity to provide the information necessary to prove a qualified status change occurred.

Administrative Tip:
Status change forms should be sent to a specific title and place and not just to the "Company". For example, "...employees should send completed and signed Status Change Forms to the Plan Administrator, The XYZ Company, 123 My Street, Yourtown, USA 55555"

Note: The new HIPAA Privacy rules will impact health care plans, including HFSAs. Status changes generally will be considered enrollment and disenrollment functions.

Administrative Tip:
Receipt or use of any health information that identifies an individual will be subject the requirements of the HIPAA Privacy rules. Plan administrators should become familiar with the impact of the privacy rules on the use and disclosure of individually identifiable health information.

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