On September 18, 2014, the IRS issued a technical notice related to election changes under cafeteria plans. IRS Notice 2014-55 specifically permits a cafeteria plan to allow an employee to revoke his or her election under a cafeteria plan for coverage under the employer’s group health plan if the employee’s hours of service are reduced to less than 30 hours per week. Prior to this notice, it would not have been permissible for a cafeteria plan to permit revocation of a cafeteria plan election under these circumstances. This notice is significant because: (a) the IRS is formally acknowledging that employee hours are being cut under 30 to avoid ACA shared responsibility penalties; and (b) the cuts are so significant that the IRS feels it is necessary to issue a formal notice on the topic.
Following is a link to the notice: Notice 2014-15