Cafeteria Plan FAQs

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Q. I bought some insurance through a Cafeteria Plan at work. When I received the policy, I decided I did not want it within the free look period, and sent it back. The insurance company says that I cannot cancel my coverage for a year. Is this right?

A. You can cancel your coverage. However, the amount of premium that you allocated to be taken out of your paycheck each month cannot be changed for one year without IRS approval, so you may want to apply with another company, or allocate those dollars to a different tax deductible item.