Voluntary Benefits

Down_the_Middle

I am seeing and hearing (numerous industries) that employers are permitting employees to discontinue payroll deductions for the voluntary pre-tax benefits (mostly accident and life)without regard to whether a "qualifying event" has occurred....... The employee allegedly enrolls in a voluntary non-group life during the open enrollment period and then wishes to drop the coverage 4,5,6 mos later due to affordability issues. It's clear that these employers are not allowing any of the core benefit plans to be dropped----only the voluntary products. Anybody seeing this???? Anybody troubled by permitting this to occur for a voluntary, non-group, non ERISA governed type of plan that is avail pre-tax????

irenesmsaclaims

Mid-year changes are subject to the election rules in the Sec. 125 plan if the voluntary coverages are a part of that. The status change (not qualifying event) must be in compliance with the rules, and the change in coverage mid-year must be consistent with the status change.

marc

Here is the scenario: EE signs up for a voluntary AFLAC insurance policy. 6 months later, EE can no longer afford the policy and withdraws consent to deduct the premium from his/her paycheck.

Now what?

This exact scenario has happened 3 or 4 times at our shop. When we discuss this with the carrier, they shrug their shoulders and ask "what can you do?"

We do not make a huge deal out of it after that. I know our actions do not agree with the letter of the Section 125 agreement, but neither do we deduct from the paycheck without continued permission.

Sure the original permission covered the entire plan year, but don' the revised instructions trump them?