Cafeteria Plans: Mid-year Election Changes

Participant elections under an Internal Revenue Code (Code) Section 125 cafeteria plan must be made before the first day of the plan year or the date taxable benefits would currently be available, whichever comes first. Participant elections generally must be irrevocable until the beginning of the next plan year. This means that participants ordinarily cannot make changes to their cafeteria plan elections during a plan year.

Employers do not have to permit any exceptions to the election irrevocability rule for cafeteria plans. However, Internal Revenue Service (IRS) regulations permit employers to design their cafeteria plans to allow employees to change their elections during the plan year, if certain conditions are met.  The IRS regulations list the permitted events that may be cause for a mid-year election change.

Also, IRS Notice 2014-55 expanded the mid-year election change rules in response to certain Affordable Care Act (ACA) provisions.

General Rules

Cafeteria plans may recognize certain events as entitling a plan participant to change his or her elections (if the change is consistent with the event). Although a cafeteria plan may not be more generous than the IRS permits, it may choose to limit to a greater extent the election change events that it will recognize.

A cafeteria plan sponsor that recognizes one or more mid-year election change events allowed by the IRS should review its plan document to confirm that it addresses the permitted election changes.

Key Concept—If a cafeteria plan incorporates one or more of the mid-year election change events, an employee who experiences one of these events may revoke an existing election and make a new election, consistent with the event, for the remaining portion of the period of coverage—but only with respect to cash or other taxable benefits that are not yet currently available.

Only an employee of the employer sponsoring a cafeteria plan is allowed to make, revoke or change elections in the employer’s cafeteria plan. The employee’s spouse, dependent or any other individual other than the employee may not make, revoke or change elections under the plan.


The information provided herein is intended solely for the use of our clients. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher or Publishers of articles within.

The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.