The IRS has begun to take a look at benefit plans of workers, commonly known as cafeteria plans. Many issues have plagued the development of these programs for various reasons. One of the main issues is that once a worker chooses the plan and they set it up, he/she cant change it again. Unless something major in his life occurs like he/she gets married, has children, gets divorced, and/or loses their job. Many people still go for these plans because they offer them a way to pay from their health, accident, or life insurance with pre-tax dollars. The income is lowered and at the end of the tax year, there are fewer taxes to pay.
Another issue that many people want to change with cafeteria plans is the mid year change. Only health, accident, or life insurance are allowed to change mid year in the cafeteria plan. They want options to make changes in all areas of the plan, for e.g. when they go from part time to full time or return from an unpaid leave of absence. They want the ability to alter the coverage. The IRS has been looking at all these issues in a recent hearing and they have decided to start implementing some of these changes shortly. What most people desire is the ability to change anything within their plans and they might be getting this sooner than they thought.