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Employers: Big Changes to Commonwealth's Cafeteria Plan Rules

Written by Patricia Moran

The Massachusetts Connector released Bulletin 03-13 on October 29, setting forth a significant course change in the Commonwealth’s cafeteria plan, HIRD, and free rider surcharge rules. Prior to Bulletin 03-13, a conflict existed between the IRS' position, stated in IRS Notice 2013-54, that employers cannot offer cafeteria plans to employees to purchase non-group health insurance without an employer contribution, and the Commonwealth's position that employers must offer an opportunity to all eligible employees to purchase coverage on a pre-tax basis through a cafeteria plan.  Bulletin 03-13 resolves that conflict by announcing the Commonwealth's pursuit of legislation to repeal the Massachusetts cafeteria plan requirements and related rules, coupled with a policy of non-enforcement pending that repeal. I discuss the changes to the Commonwealth’s cafeteria plan rules and the next steps employers need to take in further detail in this Mintz Levin Employment, Labor & Benefits alert.

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Patricia A. Moran

Of Counsel

Patricia A. Moran is an experienced employee benefits attorney at Mintz. She advises clients on a variety of employee benefit plan matters. Patricia has also worked with the US Department of Labor Employee Benefits Security Administration, where she investigated employers on ERISA compliance.