Compliance Considerations for Short Plan Years

This guide outlines compliance considerations for employers who need to implement a short plan year due to various business reasons such as reorganizations or changes in insurers. It explains the legal framework established by ERISA, which prohibits plan years longer than 12 months, and details the necessary amendments to plan documents, including summary plan descriptions and summaries of material modifications. The guide also discusses the implications of short plan years on employee elections under Section 125 cafeteria plans, Health Flexible Spending Accounts, and Dependent Care Accounts. Additionally, it covers the requirements for PCORI fees and COBRA premium adjustments during a short plan year. Employers are advised to communicate changes effectively to employees and ensure compliance with all relevant regulations, including timely reporting of creditable coverage status. The document emphasizes the importance of planning for short plan years to mitigate potential issues related to employee contributions and benefits.