Does your cafeteria plan need to be amended soon in connection with the new Health Care Laws?
As an example where an amendment might be necessary, group health plans that offer coverage covering dependent children must make that coverage available to adult children until they reach age 26 under the new Health Care Laws, and this requirement applies for plan years beginning on or after September 23, 2010. Cafeteria plans (those plans which allow employees to pay premiums for health care on a tax-free basis) may need to be amended to include employees' children who have not attained age 27 as of the end of the taxable year as covered individuals. If such an amendment is needed, you may need to act quickly, and maybe by the end of this year.
Under current proposed cafeteria plan regulations, a cafeteria plan may not be retroactively retroactive amended, and amendments are allowed to be applied prospectively only. However, in Notice 2010-38, the IRS has provided that an amendment to a cafeteria plan to allow coverage of children under age 27 retroactively back to March 30, 2010 or later may be made if it is made by December 31, 2010 and it is retroactively effective to the first date in 2010 when employees are permitted to make pre-tax contributions to cover children under age 27. Thus, if your plan will be allowing coverage of children under age 27 at some point in 2010, the IRS Notice will, contrary to current proposed cafeteria plan regulations, allow a retroactive amendment to your cafeteria plan to be made if it is made by December 31, 2010, and it is effective as of the first day on which pre-tax contributions for such coverage could be made. Or, if your plan will be allowing coverage of children under age 27 as of January 1, 2011, then if your cafeteria plan needs a corresponding amendment, it will need to be adopted and in place by January 1, 2011.
You may wish to discuss this with whoever provides your cafeteria plan documents to see if action this year is necessary.
