Sample Flexible Benefits Plan Amendment

SAMPLE FLEXIBLE BENEFITS PLAN AMENDMENT

AND SUMMARY OF MATERIAL MODIFICATIONS

Changes to Reflect IRS Notice 2013-71

The following sample Amendment and Summary of Material Modifications provides sample language to reflect a plan change for non-calendar year plans beginning in 2013 to allow participants to prospectively revoke, modify, or commence salary reduction elections for accident and health coverage once during the plan year, regardless of whether a change in status or cost or coverage change event has occurred, in accordance with IRS Notice 2013-71.

IRS Notice 2013-71 indicates that all employers who sponsor an Internal Revenue Code Section 125 cafeteria plan that has a non-calendar plan year may amend the cafeteria plan for the non-calendar plan year beginning in 2013 to allow employees to make certain prospective changes to their accident and health plan election once during such plan year without a corresponding change in status or coverage or change event. More specifically, employers with such plans may amend the plan to allow the following changes during the non-calendar plan year that began in 2013 without a corresponding change in status or cost or coverage change event:

· If the participant made an election under the cafeteria plan to participate in accident and health plan coverage for the plan year beginning in 2013, the participant may make a one-time, prospective election to revoke or modify that election to participate (e.g., to drop all accident and health insurance or drop coverage for a dependent);

· If the employee made an election under the cafeteria plan not to participate in accident and health coverage for the employee or any eligible dependents, the otherwise eligible employee may enroll the employee or, if enrolled, eligible dependents.

This amendment is optional and the employer may choose not to adopt either election change, or one or both of the election changes mentioned above . In addition, Notice 2013-71 indicates that the amendment may be more restrictive but not less restrictive. For example, the employer may limit the ability to make such election changes only during one or more months during the plan year. We are preparing this sample amendment on the assumption that employers eligible to adopt such an amendment are adopting both changes without limitation.

If the accident and health coverage is fully-insured, you should confirm that these changes are permitted by the underlying insurance policy before you adopt these changes and communicate them to employees.

NOTE: This applies only to an employee’s election under the cafeteria plan to participate in (or not to participate in) accident and health plan coverage; it does not apply to an employee’s Health FSA election.

The amendment package is provided solely for illustrative purposes and may not apply to your particular factual situation. It should not be used “as is.” Consult with your legal advisor to adapt this approach to your specific plan and factual situation.

Please note that this amendment ONLY applies to cafeteria plans with non-calendar plan years that begin in 2013. In addition,this amendment must be adopted by December 31, 2014 in order to be effective.

ACTIONS TAKEN AND RESOLUTIONS ADOPTED BY CONSENT

OF THE BOARD OF DIRECTORS OF

[Employer's Name]

The undersigned, being all of the members of the Board of Directors of [Employer's Name] (the "Employer"), hereby adopt the following Resolution by unanimous consent and direct that this Consent Resolution be entered in the minute books of the Employer.

WHEREAS, the Employer previously adopted an Internal Revenue Code (“Code”) Section 125 cafeteria plan referred to as the Flexible Benefits Plan (the “Plan”);

WHEREAS, IRS Notice 2013-71 permits employers with Code Section 125 cafeteria plans that have a non-calendar plan year to amend the plan for the plan year beginning in 2013 to allow employees to make certain election changes once on a prospective basis during the plan year without a corresponding change in status or cost or coverage change event otherwise required by Code Section 125;

WHEREAS, effective as of the beginning non-calendar plan year that begins in 2013, the Employer desires to amend the Plan consistent with Notice 2013-71, as set forth in the attached Amendment and Summary of Material Modifications; and

NOW, THEREFORE, BE IT RESOLVED that the Board of Directors has hereby reviewed the attached Amendment and Summary of Material Modifications and does hereby approve the changes set forth therein;

BE IT FURTHER RESOLVED, that the officers of the Employer are authorized and directed to take any and all action as may be necessary to effectuate this Resolution.

By ______/ Date______
By______/ Date______
By______/ Date______

SUMMARY OF MATERIAL MODIFICATIONS

TO THE FLEXIBLE BENEFITS PLAN

This document summarizes important changes to your Flexible Benefits Plan (the “Plan”). If you have any questions regarding the changes summarized in this Summary of Material Modifications (“SMM”), you should contact [insert appropriate contact].

You should keep a copy of this SMM with your Summary Plan Description for future reference.

For the plan year beginning in 2013, and notwithstanding anything to the contrary herein, eligible employees may make the following election changes on a prospective basis once during the 2013 plan year without a corresponding change in status or cost or coverage change event:

· If the participant made an election under the plan to participate in accident and health plan coverage for the 2013 plan year, the participant may make a one-time, prospective election to revoke or modify that election to participate (e.g., to drop all accident and health insurance or drop coverage for a dependent);

This change expires at the end of the non-calendar plan year that began in 2013.