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Voluntary Medical Plans Should Not be Included in Your Cafeteria Plan
Voluntary medical plans, or "AFLAC style" health insurance programs, offer to pay incurred charges for a condition or type of hospital care without regard to the precise amount being charged by the health care provider. These plans may also pay a benefit if a particular disease or condition is diagnosed even if there is no incurred charge.
The attorney for the Statewide Benefit Cooperative (SBC) has determined that these types of plans do not qualify under current IRS regulations to be included in cafeteria (section 125) plans; and therefore, the premiums for these plans should not be deducted pre-tax.
You may offer such programs to your employees outside the cafeteria plan on a payroll deduction program, but the premiums would not be paid with pre-tax income.
A letter outlining this decision was sent to your CEOs or General Mangers. Click here to view a copy of that letter. If you have any questions, you may contact Chuck Ritz, attorney for the SBC, at 765-482-0110 or critz@parrlaw.com. |
