Occasionally, employees will have life-changing events during the year which require a change to their insurance coverage. These events are called “qualifying events” because they qualify the employee to make certain changes to their benefits. These events might require adding a dependent to the employee’s insurance plans or removing a dependent from the employee’s insurance plans.
Here’s an example list of qualifying events:
- Birth of a child
- Spouse’s loss of group benefits
- Death of a dependent
- Adoption, etc.
You can also reference this QUALIFYING EVENTS CHECK LIST information sheet which will help you recognize qualifying events and help you collect the proper documentation when changes need to be made to insurance plans.
The penalty for failing to comply with Section 125 requirements can include additional income taxes against participants, employment taxes against both employer and employee, and penalties for failing to withhold and report taxes properly. Operational or documentation errors can cause the entire Section 125 plan to be disqualified.