New rules for accident and health insurance cafeteria plans.Cafeteria plans are benefit plans that allow employees to choose certain nontaxable benefits (such as accident or health coverage) in lieu of cash, without the employee having to include the cash in gross income. In effect, such plans enable employees to convert what would otherwise be taxable compensation into excludable benefits suitable to employees' own particular needs. The Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when of 1996 (HIPAA (Health Insurance Portability & Accountability Act of 1996, Public Law 104-191) Also known as the "Kennedy-Kassebaum Act," this U.S. law protects employees' health insurance coverage when they change or lose their jobs (Title I) and provides standards for patient health, ) was enacted to improve health insurance availability for individuals who lose health care coverage due to changing or losing their jobs. As a result, some of the rules applying to cafeteria plans needed to be changed to conform the accident and health insurance provisions to the new special enrollment rights provided under HIPAA. In a cafeteria plan, employees have the right to choose among two or more benefits consisting of cash and qualified benefits. A qualified benefit is any benefit excludable from gross income because of an express provision in the IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. , including employer-provided accident or health insurance, group-term life insurance, elective contributions under a cash or deferred arrangement, dependent care assistance and adoption assistance. Qualified benefits do not include: long-term care-insurance, medical savings accounts  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. , qualified scholarships, educational assistance programs, and certain other fringe benefits fringe benefits, n.pl the benefits, other than wages or salary, provided by an employer for employees (e.g., health insurance, vacation time, disability income). . An employee may elect to choose between the cash and the qualified benefits before the beginning of the coverage period (generally, the plan year of the cafeteria plan); changes in the election during the plan year usually are allowed only under very limited circumstances. NEW RULES The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. recently issued new rules that allow employees to change health coverage (in light of the HIPAA changes) and permit plans to allow changes in coverage during the plan year for a variety of "changes in status. " Such changes are limited to specific events, including * Changes in marital status--because of marriage, death of a spouse, divorce, legal separation or annulment annulment Legal invalidation of a marriage. It announces the invalidity of a marriage that was void from its inception. It is to be distinguished from dissolution or divorce. To justify annulment, the marriage contract must have a defect (e.g. . * Changes in the number of dependents--because of a dependent's birth, adoption, placement for adoption or death or an unmarried dependent's satisfying (or ceasing to satisfy) the requirements for attainment of age or student status. * Changes in employment status--because of employment termination or commencement by an employee, spouse or dependent; change in work schedule, including a reduction or increase in the hours of employment by the employee, spouse or dependent; switch between part- and full-time work; strike or lockout lockout, intentional closing up of a company, factory, or shop by an employer to prevent employees from working during a strike or labor dispute. The term lockout ; or the beginning or end of an unpaid leave of absence. * Changes in residence or worksite by the employee, spouse or dependent. * Changes due to judgment, decree or order--resulting from divorce, legal separation, annulment or change in legal custody, including a qualified medical child support order. * Changes due to entitlement to Medicare or Medicaid. * Significant coverage or cost changes. * Changes in status for other qualified benefits. * Cessation of required contributions. * Special requirements concerning the Family and Medical Leave Act. Under the new rules, only the limited circumstances specifically listed qualify as changes in status. Other employment situations--such as changing from hourly to salaried employment or from union to nonunion nonunion /non·union/ (non-un´yun) failure of the ends of a fractured bone to unite. non·un·ion n. The failure of a fractured bone to heal normally. contracts or even introducing new benefits to an existing cafeteria plan in mid-year--do not. Offering revocation The recall of some power or authority that has been granted. Revocation by the act of a party is intentional and voluntary, such as when a person cancels a Power of Attorney that he has given or a will that he has written. or election possibilities for these other situations may endanger a plan's qualification. CHANGES TO PLAN DOCUMENTS To comply with the new rules (and thereby continue to qualify as cafeteria plans), plan documents, administrative procedures and employee communications must provide for,the revocation and election of benefits based on these changes in status. For a discussion of this and other recent developments, see the Tax Clinic, edited by James Connor James Connor may refer to:
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