Key Takeaways
- The IRS has issued Notice 2021-15, clarifying sections of the Taxpayer Certainty and Disaster Tax Relief Act of 2020
- This Act allows employers to relax certain requirements for making mid-year changes to benefit elections in plans like Lehigh’s, which are known as “Section 125 cafeteria plans.”
- Lehigh has opted in to these relaxations which are in the best interest for our faculty, staff and their families. As a result, employees may make certain changes to their medical benefit plans this year without a Qualifying Life Event.
- Read this full email for detailed instructions and limitations.
Dear Lehigh Staff and Faculty:
The IRS recently issued Notice 2021-15 in an effort to clarify the application of Section 214 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, recently enacted as part of the Consolidated Appropriations Act. This notice also relaxes some of the requirements pertaining to benefits plans such as Lehigh’s, which are known as "Section 125 cafeteria plans," specifically with regard to making mid-year changes to benefit elections.
As you may know, in exchange for tax-favored status, an employee’s benefit elections made as a new enrollment or during the annual open enrollment period are generally irrevocable for the remainder of the plan year. Certain circumstances, known as Qualifying Life Events (QLEs), only permit changes that are consistent with the event itself (for example, you may add a new dependent to your plan after a birth or adoption).
The relaxed regulations provide more flexibility to participants in a cafeteria plan, allowing an employee to revoke an election and make a new election without a QLE. While employers are not mandated to adopt any of the relaxed regulations, Lehigh has determined that adopting some of these changes will be in the best interest for our faculty, staff and their families.
Changes Adopted by Lehigh
Among the changes permitted in Notice 2021-15 being adopted by Lehigh University are the following:
- If you waived medical insurance through Lehigh previously, you may enroll in a plan at this time.
- If you are currently enrolled in a medical plan and would like to waive your coverage to obtain coverage through an external source, you may do so.
- If you are currently enrolled in a medical plan and would like to switch to a different medical plan, you may do so.
- If you are currently enrolled in a medical plan and would like to change your coverage level by adding or removing dependents, you may do so.
Procedure for Requests and Limitations
Any changes you wish to request in relation to these relaxed regulations must be submitted in writing via a completed 2021 COVID-19 Request to Change Benefit Election Form and are subject to review by a Human Resources representative. In addition, please note the following:
- You may only request these changes if you are already eligible for the relevant benefit.
- Consider your choices carefully. You may only request changes to benefits as a result of the relaxed regulations once through October 31, 2021. All additional changes may only be made with a QLE or during open enrollment.
- All requests for changes, if approved, will become effective on the first day of the month following the date your request is received by Human Resources.
- Any changes not listed above or on the request form will be reviewed in conjunction with the standard QLE guidelines. Events like the birth of a child, marriage, loss of coverage through a spouse or partner, etc. will continue to be reviewed and processed in accordance with QLE guidelines that are already in place. More information on QLEs is available at this link.
More detailed information on the relaxed regulations stipulated in IRS Notice 2021-15, including things to keep in mind when requesting changes and limitations on these changes, is available at this link. There, you will also find a link to the required 2021 COVID-19 Request to Change Benefit Election Form.
The relaxed regulations allowing mid-year changes will remain in effect through October 31, 2021.
If you have questions regarding this information, please contact Human Resources at inben@lehigh.edu or leave a message at 610-758-3900.
Sincerely,
Patricia Florkowski
Director of Benefits