Pre-tax payroll deduction cancellation

So, I totally understand that you can't revoke pre-tax payroll deduction agreement at will. My question is a bit different, I think.

Employer is cutting all employees hours in half, thus cutting pay in half, for two or three months. Employees have an employer provided HSA...no problems there, it's employer provided. Employees also have various AFLAC policies, some are pre-tax and some not. Is there a way within the IRS guidelines for the employees to revoke/cancel some or all of the supplemental policies outside of the open enrollment/change period? The employees are thinking to cancel all supplemental benefits until the next enrollment period. Is this possible?

By the way, I'm not sure what constitutes a "written" cafeteria plan, but I do know that I haven't seen anything from the employer regarding the plan (except they withhold the amounts requested and forward them to AFLAC). Everything is done between the insurance company (AFLAC) agent and the employee.

Brenda E

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3 Replies

clmakin

Contributor

11/04/09 4:24pm PST

I think this is a question the employees need to be discussing with the AFLAC agent, since the terms of the contract would dictate it. It might be that the policy requires fulltime employment, so a reduction in hours would result in a loss of benefits. Maybe not.

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BEllis

Contributor

11/04/09 4:30pm PST

Unfortunately,the AFLAC agent is stating that she can't cancel/revoke any of the policies because they are not "true AFLAC", but cafeteria plan, thus under IRS regs. Not sure if she is very well informed, so seeking additional information on this. Any answer/comment/assistance with this issue will be most greatly appreciated, as it's a bit over my head (even though I guess I should know this).

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sjrcpa

Accountant Community AllStar

11/05/09 8:10am PST