Zane Benefits Publishes New Information on New Salary Reduction Rules

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New Mid-Year Salary Reduction Elections Allowed in Certain Cases

Today, Zane Benefits, the number one online small business health benefits solution, published new information on new salary reduction rules.

According to Zane Benefits’ website, traditionally with Section 125 Cafeteria Plans, employees must elect a salary reduction agreement before the start of the plan year and cannot change their election during the plan year, unless there is a qualifying life event and the employer allows such a change.

In the January 2, 2013 Federal Register, the IRS provided proposed regulations that included a transition rule for employee health coverage under a Cafeteria Plan with a non-calendar plan year.

What this means is that an employee with coverage under a non-calendar plan could change their Cafeteria Plan (salary reduction) election. For example, an employee could stop his mid-year election for the group health plan coverage to purchase a subsidized individual plan from the Marketplace.

The new provisions permit employers to amend one or more of their Cafeteria Plan documents to allow mid-year salary reduction elections, even though an individual may not have experienced a life status event.

An employer may amend its plan to allow employees to make one or both of these salary reduction changes through a non-calendar cafeteria plan on a prospective basis:

  • Change or revoke his or her election for accident and health plan coverage one time during the plan year; and/or
  • Make a one-time prospective election for accident and health coverage if the employee failed to make an election before the non-calendar plan began in 2013.

The employer's Cafeteria Plan amendment may be more restrictive than the Notice guidance, but it may not be less restrictive. For example, an employer may limit the time period an employee may have to make the changes noted above instead of allowing the remainder of the plan year. These election changes are only permitted one time during the plan year and only apply to employees' accident and health coverage.

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About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHealth") for defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about Zane Benefits, visit

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Christina Merhar
Zane Benefits
+1 (800) 391-9209 Ext: 6725
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