24HourFlex Section 125 Change of Status Matrix
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BCDEF
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EventHealth InsuranceHealth FSADependent Care FSAExamples
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Employee gains spouse (marriage)Add: Spouse/Dependents (C/T/H)
Drop: Dependents (C1)
Drop: Coverage (C1)
Change: Coverage - from PPO to HMO, etc
Increase: Election (H2)
Decrease: Election (C)
Make: Election (H2)
Revoke: Election (C) - See Example
Increase: Election (C2)
Decrease: Election (C2)
Make: Election (C2)
Revoke: Election (C2)
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Employee loses spouse: Divorce,
legal separation, annulment,
death of spouse
Add: Coverage (C/H1)
Add: Dependents (C/H1)
Drop: Coverage only for the spouse (C)
Change: Coverage (from PPO to HMO, etc)
Increase: Election (C/H2)
Decrease: Election (C/H2)
Make: Election (C, H2)
Increase: Election (C2)
Decrease: Election (C2)
Make: Election (C2)
Revoke: Election (C2)
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Gain dependent (birth, adoption or placement for adoption)Add: Dependent (C/H1/T)
Drop: Coverage (if gaining eligibility under spouse's plan)
Reduce: Coverage (if gaining eligibility under spouse's plan)
Change: Coverage (from PPO to HMO, etc)
Increase: Election (C/H2)
Decrease: Election (if gaining eligibility under spouse's plan)
Make: Election (C/H2)
Revoke: Election (if gaining eligibility under spouse's plan)
Increase: Election (C2)
Make: Election (C2)

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Loss of dependent (death, placement for adoption)Drop: Dependent (C)
Change: Coverage (from PPO to HMO, etc)
Decrease: Election (C)
Revoke: Election (C)
Decrease: Election (C)
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Employee gains eligibility under their
employer's plan
Add: Coverage (C/EY/T)
Change: Coverage (from PPO to HMO, etc)
Make: Election (C/EY)Make: Election (C2/EY)
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Employee maintains prior eligibility under employer's plan after return from termination or unpaid leave within 30 daysReinstate prior election at termination unless another event occurred that allows a changeReinstate prior election at termination unless another event occurred that allows a changeReinstate prior election at termination unless another event occurred that allows a change
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Employee Rehired or returns from non-FMLA leave without pay after 30 days (if addressed in plan document)Employee may make new electionEmployee may make new electionEmployee may make new election
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Employee loses eligibility under employer's plan through change in employmentDrop CoverageDrop CoverageDrop Coverage
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Spouse/Dependent gains eligibility under their employer's planDrop: Coverage (if added to other coverage)
Drop: Spouse/Dependents
Change: Coverage (from PPO to HMO, etc)
If the employee gains eligibility under their spouse/dependent's plan they may
Decrease: Election
Revoke: Election
Make: Election (C)
Increase: Election (C)
Decrease: Election (C)
Revoke: Election (C)
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Spouse/Dependent loses eligibility under their employer's planAdd: Coverage (H1/T)
Add: Spouse/Dependents (H2/T)
Make: Election (H2)
Increase: Election (H2)
Make: Election (C)
Increase: Election (C)
Decrease: Election (C)
Revoke: Election (C)
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Dependent gains eligibility under employee's planAdd: Dependents (C/T)Make: Election (C)
Increase: Election (C)
Make: Election (C2)
Increase: Election (C2)
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Dependent loses eligibility under employee's planDrop: Affected Dependent (C)Decrease: Election (C)Decrease: Election (C2)
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Move by employee causes gain of eligibilityAdd: Coverage (C/EY)Increase: Election (C)
Decrease: Election (C)
N/A
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Move by employee causes loss of eligibilityDrop and elect similar coverage, or drop coverage entirely if no similar coverage exists (C/E/DY)Increase: Election (C)
Decrease: Election (C)
N/A
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Spouse's or Dependent's move causes gain of eligibilityAdd: Spouse/Dependents (C/EY)Increase: Election (C)
Decrease: Election (C)
N/A
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Spouse's or Dependent's move causes loss of eligibilityDrop: Spouse/dependents (C/E)Increase: Election (C)
Decrease: Election (C)
N/A
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If employer maintains an off-calendar year Section 125 Plan, that starts in 2013, and they amend their plan document to allow for this change, and an employee wants to switch to a plan offered under one of the marketplacesDrop: Employer CoverageNo change allowedN.AAn employee may choose to revoke their coverage under the employer plan in order to change to one of the plans offered under the marketplace (only if the employer is an off-calendar year Section 125 plan and has chosen to allow this status change)
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Employer initiated small cost changesIncrease or decrease costNo Change AllowedN/AThe IRS has issued no real guidance on when a cost change is "significant" or "insignificant". The regulations mention an example of 12.5% (being significant) but the IRS has indicated that this should not be interpreted as a safe harbor guideline.
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Employee initiated small cost changesN/AN/AIncrease: Election
Decrease: Election
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Employer-submitted significant cost increaseIncrease CostsNo Change AllowedN/AAn employer decides mid-year that they wish to adjust the amount of employer contributions provided for major medical coverage. It is determined that the increase to employees is "significant". The employees are permitted to make mid-year election changes based on this provision if provided for in the plan document.

The IRS has issued no real guidance on when a cost change is "significant" or "insignificant". The regulations mention an example of 12.5% (being significant) but the IRS has indicated that this should not be interpreted as a safe harbor guideline.
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Permitted response by employee to employer-submitted significant cost increaseDrop and elect similar coverage (DY)No Change AllowedN/A
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Employer-submitted significant cost decreaseDecrease CostsNo Change AllowedN/A
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Permitted response by employee to employer-submitted significant cost decreaseAdd Coverage
Revoke similar coverage and election
No Change AllowedN/A
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Employer-Initiated significant coverage curtailmentDocument coverage curtailmentNo Change AllowedN/AAn entire network of hospitals no longer accepts the health insurance offered through the employer. Many participants lose their primary care physicians and specialists. The employer offers another benefit option that still includes the hospital network. The employees change their elections to avoid the coverage curtailment.


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Permitted response by employee to employer-initiated coverage curtailmentDrop and elect similar coverage (DN)No Change AllowedN/A
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Permitted response by employee to curtailment resulting in loss of coverageDrop and elect similar coverage (DY)No Change AllowedN/A
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Employer adds new benefit or optionEnter benefit/coverage change into systemNo Change AllowedEnter benefit/coverage change into systemAn employer has previously provided the choice of a PPO or HMO under the major medical plans. They decide mid-year to add a High Deductible Health Plan (HDHP) with HSA as a benefit offering. Since this is an employer initiated improvement, this provision allows employees to make an election change to th HDHP and revoke the election to the PPO or HMO.










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Permitted response by employee to addition of new benefit or optionRevoke similar coverage and election
Add: Coverage
No Change AllowedRevoke similar coverage and election
Add: Coverage
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Employer drops existing benefit or optionEnter benefit/coverage change into systemNo Change AllowedEnter benefit/coverage change into system
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Permitted response by employee to drop of existing benefit or optionElect similar coverageNo Change AllowedElect Similar Coverage
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Employer replaces on benefit or option with similar benefit or optionEnter benefit/coverage change into systemNo Change AllowedEnter benefit/coverage change into system
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Permitted response by employee to replacement of benefit or optionNo change allowed unless considered significant cost increase or coverage curtailmentNo Change AllowedNo change allowed unless considered significant cost increase or coverage curtailment
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Significant improvement of benefit or optionEnter benefit/coverage change into systemNo Change AllowedN/A
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Permitted response by employee to significant improvement of benefit or optionRevoke similar coverage and election
Add: Coverage
No Change AllowedN/A
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Employee changed DCAP providersN/AN/AChange deductions to reflect new rates (if provider is not a relative)
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DCAP provider changes ratesN/AN/AChange deductions to reflect new rates (if provider is not a relative)
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Another employer plan adds or increases coverageDrop: Coverage
Drop: Spouse/Dependents
No Change AllowedDecrease: Coverage (C)
Revoke: Coverage (C)
Example 1: A son's employer begins offering coverage for the first time, which provides him with major medical, dental and vision coverage. Even though the son is still a dependent for the purposes of the plan, the parent wishes to drop the son from coverage since he has other insurance.

Example 2: A husband has open enrollment in December each year. His wife has open enrollment in June. The husband covers the entire family through his employer, but in June the family decides to switch to the wife's insurance. The husband is permitted to drop all coverage under this provision.
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Another employer plan drops or decreases coverageAdd: Coverage
Add: Spouse/Dependents
No Change AllowedMake: Election (C)
Increase: Election (C)
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Open enrollment under employer plan of spouse or dependentAdd: Coverage
Add: Spouse/Dependents
Drop: Coverage
Drop: Spouse/Dependents
No Change AllowedMake: Election (C)
Increase: Election (C)
Decrease: Election (C)
Revoke: Election (C)
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Employee begins FMLA leaveRevoke election and make another election as provided under FMLARevoke election and make another election as provided under FMLARevoke election and make another election as provided under FMLA
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Employee returns from FMLA leaveMake new election if coverage terminated under FMLAMake new election if coverage terminated under FMLAMake new election if coverage terminated under FMLA
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Employee mistake in making an election Make administrative changes as needed (must have "clear and convincing" evidence)Make administrative changes as needed (must have "clear and convincing" evidence)Make administrative changes as needed (must have "clear and convincing" evidence)
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Employer mistake in making electionMake administrative changes as needed (must have "clear and convincing" evidence)Make administrative changes as needed (must have "clear and convincing" evidence)Make administrative changes as needed (must have "clear and convincing" evidence)
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Changes needed to maintain status under Code Section 125 or to prevent violation of the nondiscrimination rulesMake administrative changes as neededMake administrative changes as neededMake administrative changes as needed
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Judgement, decree, or order requires coverage under employee's planIncrease: CoverageMake: Election (C)
Increase: Election
No change allowed
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Judgement, decree, or order requires spouse, former spouse, or other person to provide coverageDrop affected dependent (C3)Decrease: Election (C3)No change allowed
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Employee becomes entitled to medicare or MedicaidDrop: CoverageDecrease: Election (C)
Increase: Election (C)
No change allowed
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Spouse/Dependent under employer's plan become entitle to medicare or MedicaidDrop: Spouse/DependentDecrease: Election (C)
Increase: Election (C)
No change allowed
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Employee loses eligibility to medicare or MedicaidAdd: Coverage (C)Increase: Election (C)
Decrease: Election (C)
No change allowed
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Spouse/Dependent under employer's plan loses eligibility to medicare or MedicaidAdd: Spouse/DependentIncrease: Election (C)
Decrease: Election (C)
No change allowed
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