Election Periods & The 30-Day Myth


Frequently Asked Question: Is it correct that an employee has 30 days after making an election as a new hire, or 30 days after open enrollment ends, in which to make a change to his or her election?

  1. No. This is a common misconception among employers and some employees. The misconception arises from the fact that most Section 125 plans sponsored by employers include a 30-day window to make a mid-year election change upon a status change or qualifying event (including HIPAA special enrollment events). The 30-day period is a feature of plan design and applies only to mid-year changes. It does not apply to elections made by new hires or elections made at open enrollment. Once the plan year begins or coverage is effective for a new hire, a pre-tax election cannot be changed without an IRS-recognized qualifying event. Three quick examples to illustrate:
  • Employee is hired with an immediate entry date for health insurance or other eligible pre-tax benefit options. Technically, the employer should receive the election on the first day of employment. If and when employee makes the election, he is locked into the pre-tax elections. There is no 30-day change period.
  • Employer holds its open enrollment in advance of a new benefits plan year for January 1. Employee elects health insurance or other eligible pre-tax benefit options. After the plan year starts, employee notifies employer on January 20 that he wishes to change one of the pre-tax elections. Should employer allow it? No, unless there is a recognized mid-year qualifying event under IRS and plan rules.
  • During the benefits plan year, employee experiences a recognized mid-year qualifying event. Per plan terms, employee has 30 days to notify the employer of the change. This is the only correct application of the 30-day rule.
Jason Cogdill is the lead in-house counsel for ProBenefits and oversees compliance initiatives for the organization. Jason, along with fellow attorney Laura Bibb (Senior Compliance Counsel), manages compliance support for plans and services provided by ProBenefits and serves as a resource for employers and plan advisors. Jason is a well-known, frequent speaker and presenter on a range of benefits compliance topics.