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IRS Guidelines for COVID-19 Enrollments

The IRS has issued updated guidelines for group sponsored, Section 125 benefit plans. Under these new guidelines, groups are able to amend and/or modify their Section 125 agreement, so that employees are able to make mid-year changes and still qualify for pre-tax deductions for their benefit plan(s).

As a best practice, you should work with your broker when putting together your amendment. You and your broker should work with your benefit plan carrier(s) to ensure your group is able to process mid-year changes appropriately. 

Zenefits will provide you with a template for which you can use as an amendment to your Section 125 agreement which will be available in the Compliance section of the Benefits Administration app. Once you have signed and completed the amendment, you can upload this into Zenefits in the Compliance section of the Benefits Administration app.
  1. Navigate to the Benefits Administration app.
  2. Choose the “Employees” tab.
  3. Select an employee that will participate and make elections/changes.
  4. Create a new Qualifying Life Event enrollment for the employee(s) to make their benefits elections in.  
  • This new Qualifying Life Event (QLE) enrollment type will only be available for groups that have uploaded their completed Section 125 amendment.  
  • When creating the QLE enrollment, the effective date must be within the last 45-days.  
  • Admins do not need to create a new QLE for employees that previously elected during the SEP (Special Enrollment Period). 
Groups with employees who previously elected are also able to process a Section 125 amendment, which would retroactively apply to employees that enrolled during the SEP.  
  • By doing so, you will allow your employees who elected to have their deductions converted to pre-tax for those pay periods that were previously processed and thus increase their net pay.
  • Employees who previously participated in the SEP offered by benefit carriers will need their deductions adjusted so that pre/ post tax deductions are correct in payroll.
  • If any of your employees elected during the SEP, you will need to reach out to the Zenefits Customer Care team to remove these employees from a “Do Not Push” (DNP) deductions list.
  • Once Zenefits removes DNP from these employees you should remove the post-tax deductions you manually created for these employees.
Zenefits will provide groups with a census of employees that made elections during the SEP so you can easily identify these employees.  

If you are using Zenefits as your payroll provider, we will work with you to process any payroll corrections that are needed, for the retroactive change to your Section 125 agreement.

If you are using a third party payroll provider, please work with them to ensure your employees’ taxability is correct for the respective pay periods.

Employees wishing to decline coverage will need to provide a special attestation to your benefits carrier. Please work with your broker and carrier outside of the system to make these changes directly with your benefits carrier(s). Once you have processed the changes with your carrier(s), you can update the employee’s enrollment information in Zenefits.

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