Does shortening the section 125 plan year to Dec 1 to avoid 1-1 start of ACA qualify for a “business reason” ?

Question came in CEBS list serve today.:

 

With a current Section 125 Plan year running 1-1 through 12-31. IRS Regulations indicate a Short Plan year would be allowed for “business reasons” and have read literature citing a move to another insurance carrier would fall in this category. Noting that back to back short plans are not allowed to allow a move the following year back to a January 1 date is understood.
1. Are there concerns moving a current plan year to a short plan year? Ric Joyner: Depends on who is concerned (wink). I could soap box a bit and say that the concerns are possibly with the Obama Administration which controls HHS and CMS which could issue a reg stopping the change but I don’t see the IRS doing stopping this which in reality actually has control over this type of situation and the Service (IRS) has not defined a business reason yet so this would work.

2. If there is not, are there any concerns with holding open enrollment twice in a calendar year, assuming the above had a January 1, 2013 open enrollment and now will have a December 1, 2013 open enrollment. No. Non issue and a distraction to the intent of the reg.

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