Q. Our client made a carrier change on 1/1/23. The final rates were less than the rates used to determine the employer and employee contributions. The group didn’t notice this until recently. Can they now reduce the employee contribution since they have a premium-only Section 125 plan?
A. If the change is not significant (generally 10% or less), yes, the employer can lower premiums mid-year, provided the election forms that employees complete when signing up for the cafeteria plan authorize the employer to deduct the cost of premiums for the benefits elected (this is common). If the change is significant (more than 10%), this creates a new open enrollment opportunity for those in the plan to drop coverage (unlikely) or those who declined the plan at the start of the year to enroll now (more likely).