Discussion:Payroll Question - Section 125 via COBRA ???
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Discussion Forum Index --> Basic Tax Questions --> Payroll Question - Section 125 via COBRA ???
Discussion Forum Index --> Tax Questions --> Payroll Question - Section 125 via COBRA ???
| 26 February 2008 | |
| We have a new Employee that has just started with Company.
Company currently has a Premium Only Plan (POP) LLC, BTW. New EE has would like to like to have His COBRA pretaxed via his paycheck, vs paying on his own, IE Post Tax. The waiting period is for the normal medical plan is 90 days, will the EE have to wait until his 90 days is up first, or can we set him up as a Pretax S125 EE and pay the COBRA company for the Employee and be OK ??? Many Thanks in Advance !!! Michael C | |
| 27 February 2008 | |
| Any Help ???
Perhaps this belongs in another Forum ??? Appreciate any feedback. Michael C | |
| February 27, 2008 | |
| Did you take a look at Sec. 125? Or the plan? I don't know the answer, but I think it's no. | |
| 27 February 2008 | |
| My understanding is that this is permissible, but only after the 125 plan document is amended or restated to create a benefit for reimbursement of other plan sponsor premiums, AND the other plan sponsor is not permitted to be an employer currently of that employee, AND the COBRA benefit cannot be subsidized in any way by the other employer/sponsor. The Cafeteria Plan Q and A's and Reg's from the IRS do not directly address this situation, however, as best as I can recall. They DO address COBRA benefits running through the firing employer's S125 plan, but not thru a successor employer's plan.
Also, I have seen plans which will reimburse these non-employer premiums only in a flex plan (not a POP), so you may be required to set up a section 105-type S125 plan to do this. Probably worth a call to the administrator of your POP plan and plan document for the recommended best treatment. Another alternative is a call to an employee benefits law attorney, who can maybe just draw up a plan amendment for you, assuming it is OK to run this new benefit through a POP. Anyone else can help on this? | |
