The One Big Beautiful Bill (OBBB), President Trump’s signature legislation, contained provisions that affected nearly every sector of the American economy, including employee benefits. For example, the OBBB included changes impacting QHDHPs and HSAs, an increase to the DCAP limit, and extensions of certain COVID-era regulations.
One particular provision of the bill is prompting questions from employees regarding mid-year enrollment in the employer’s health plan.
The OBBB eliminated the increased subsidies for Health Insurance Marketplace plans implemented during the Biden administration in 2021. Due to the elimination of these subsidies, the cost of Marketplace coverage is set to increase substantially, effective 1/1/2026. The increased cost is causing many Americans currently enrolled in Marketplace plans to rethink their coverage options. As a result, many employers have the following question: Is the increased cost of Marketplace plans a cafeteria plan qualifying change event that will allow employees to drop Marketplace coverage and enroll in the employer’s non-calendar year plan effective January 1, 2026?
The answer to the above question is NO. A voluntary decision to end Marketplace coverage (even due to increased cost) is not a cafeteria plan qualifying change event. Note that this issue only arises with non-calendar year plans; with calendar year plans, employees and/or dependents who have had Marketplace coverage can enroll in the employer plan during open enrollment for the 2026 plan year.
