Is a plan administrator free to change carriers or to change from an PPO to an HMO pursuant to his or her discretion?

Yes, the plan administrator can make these changes. The problem is that the employee-participants cannot make corresponding changes to their elections until the next open-enrollment period. For example, if an employee elects $500 in the Medical Reimbursement Account because that is the deductible in the employer-sponsored PPO, he cannot reduce that amount if the employer switches midyear to a $10 copay HMO. That employee would lose whatever money he couldn't use.