Understanding Section 125 Qualifying Events
Understanding Section 125 Qualifying Events
Introduction
As an employee, you might have heard about Section 125 Qualifying Events. These events are important for employees who have enrolled in a flexible spending account (FSA) or a health savings account (HSA) through their employer. In this article, we will discuss the various events that qualify under Section 125 and how they affect employees.
Personal Experience
I remember when I first enrolled in an FSA through my employer. I was excited about the potential savings on healthcare expenses. However, I didn’t realize that there were certain events that could affect my FSA contributions. When I experienced one of these events, I was caught off guard and had to adjust my contributions accordingly. That’s when I realized how important it is to understand Section 125 Qualifying Events.
What are Section 125 Qualifying Events?
Section 125 Qualifying Events are specific life events that allow employees to make changes to their FSA or HSA contributions outside of the open enrollment period. These events include:
- Marriage or divorce
- Birth or adoption of a child
- Change in employment status (such as a new job or losing a job)
- Change in dependent status (such as a child turning 26 or becoming ineligible for coverage)
- Change in residence
- Significant change in healthcare coverage
What Happens During a Qualifying Event?
When a qualifying event occurs, employees have the opportunity to make changes to their FSA or HSA contributions. For example, if an employee gets married, they can increase their FSA contribution to cover their spouse’s healthcare expenses. Alternatively, if an employee loses their job, they can decrease or stop their FSA contributions altogether.
Events Table
Here is a table summarizing the various events that qualify under Section 125:
| Event | Description |
|---|---|
| Marriage | When an employee gets married |
| Divorce | When an employee gets divorced |
| Birth or Adoption of a Child | When an employee has a new child through birth or adoption |
| Change in Employment Status | When an employee starts a new job or loses their job |
| Change in Dependent Status | When an employee’s dependents change (such as a child turning 26 or becoming ineligible for coverage) |
| Change in Residence | When an employee moves to a new address |
| Significant Change in Healthcare Coverage | When an employee experiences a significant change in healthcare coverage (such as losing coverage or experiencing a significant increase in premiums) |
Celebration of Section 125 Qualifying Events
While Section 125 Qualifying Events may not seem like a reason to celebrate, they do provide employees with the flexibility to adjust their FSA or HSA contributions to better fit their needs. Employers can encourage employees to take advantage of these events by providing educational resources and reminding them of upcoming open enrollment periods.
Question and Answer
Q: Can I make changes to my FSA or HSA contributions outside of a qualifying event?
A: No, you can only make changes to your FSA or HSA contributions during the open enrollment period or during a qualifying event. Q: How long do I have to make changes after a qualifying event?
A: Generally, you have 30 days from the date of the qualifying event to make changes to your FSA or HSA contributions. Q: What happens if I don’t make changes during a qualifying event?
A: If you don’t make changes during a qualifying event, your FSA or HSA contributions will remain the same until the next open enrollment period.
Conclusion
Understanding Section 125 Qualifying Events is important for any employee who has enrolled in an FSA or HSA through their employer. By knowing what events qualify and how they affect your contributions, you can make the necessary adjustments to ensure you are getting the most out of your healthcare benefits. Remember to take advantage of these events when they occur and consult with your employer or benefits administrator if you have any questions.