A qualified Section 125 event (also known as a permitted election change event) refers to specific life or employment changes that allow an employee to modify their pre-tax benefit elections (such as health insurance, flexible spending accounts, or dependent care assistance programs) outside of the usual open enrollment period.
These events are defined under IRS Section 125 regulations and typically fall into the following categories:
- Change in Legal Marital Status
- Marriage
- Divorce or legal separation
- Death of a spouse
- Annulment
2. Change in Number of Dependents
- Birth or adoption of a child
- Placement for adoption
- Death of a dependent
3. Change in Employment Status
- Starting or ending a job
- Change from full-time to part-time (or vice versa)
- Leave of absence (including FMLA)
- Return from unpaid leave
4. Change in Dependent Eligibility
- A dependent becomes ineligible due to age or other status
- Gaining or losing eligibility for another plan
5. Change in Cost or Coverage
- Significant change in cost or coverage (e.g., plan discontinuation)
- Addition or significant improvement of a benefit package option
6. Other Events
- Court order (e.g., child support or custody order requiring health coverage)
- HIPAA special enrollment rights (e.g., losing other coverage)
- Medicare or Medicaid entitlement or loss
Important Notes:
- You typically must notify your benefits administrator and make election changes within 30 or 60 days (depending on the plan) of the qualifying event.
- The election change must be consistent with the event (e.g., if you have a baby, you can add the child to your health plan, but not drop unrelated coverage).
