flosfur Posted July 30, 2000 Share Posted July 30, 2000 1. Where in the Code/Regs/Ruling etc can I find the medical expenses that can be reimbursed from a Section 125 plan? From general reading, I understand that the reimbursable expenses are those that can be deducted under Code section 213 (without regard to the 7.5% exclusion - but I can't find express reference! 2. Can a participant pay premiums from his/her Section 125 plan account for an individual health insurance policy to cover the benefits not provided by the employer's medical plan or if the employer does not have a medical plan? Thanks for your help. Link to comment Share on other sites More sharing options...
Dave Baker Posted July 30, 2000 Share Posted July 30, 2000 Lemme take a stab at the first one -- A cafeteria plan can offer only certain types of benefits -- see the regs at http://frwebgate1.access.gpo.gov/cgi-bin/w...action=retrieve One of those types of benefits is coverage under an accident or health plan described in Code section 105 (says that reg). A flexible spending account under a cafeteria plan would be such coverage, specifically it would be a self-insured medical reimbursement plan described in section 105(h). Regs under 105(h) are used to determine whether a benefit (a reimbursement) is taxable or nontaxable, when the 105(h) program is offered as part of a cafeteria plan - http://frwebgate1.access.gpo.gov/cgi-bin/w...action=retrieve - they say that "A self-insured medical reimbursement plan is a separate written plan for the benefit of employees which provides for reimbursement of employee medical expenses referred to in section 105(B)." (Emphasis added.) 105(B) says: (B) Amounts expended for medical care Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include amounts referred to in subsection (a) if such amounts are paid, directly or indirectly, to the taxpayer to reimburse the taxpayer for expenses incurred by him for the medical care (as defined in section 213(d)) of the taxpayer, his spouse, and his dependents (as defined in section 152). (Emphasis added.) Best quickie list of allowable expenses is included in IRS Publication 502: http://www.irs.ustreas.gov/prod/forms_pubs...pubs/p50207.htm [Edited by Dave Baker on 07-30-2000 at 12:17 AM] Link to comment Share on other sites More sharing options...
flosfur Posted July 30, 2000 Author Share Posted July 30, 2000 Dave: Thanks for your such a quick & detailed reponse. Any opinion on the second Q. Pub 502 allows health insurance policy premium as a deduction (subject to the 7.5% threshhold). Link to comment Share on other sites More sharing options...
Joe Priselac Posted July 30, 2000 Share Posted July 30, 2000 Basharat, You can set up a spending account arrangement to be reimbursed for qualifying individual health insurance premiums. You can not be reimbursed through a conventional health flexible spending account which is for unreimbursed medical expenses. The Cafeteria Plan document should be written to create a separate account with its own election and eligibility requirements. Individual policies must be in the employee's or the employer's name. The policy can not have a deferred cash value element if it is to qualify. Link to comment Share on other sites More sharing options...
flosfur Posted July 31, 2000 Author Share Posted July 31, 2000 Joe: Thanks for your response. Unfortunately I am still lost & even more confused. Pardon my ignorous please, but I have not heard of a year-to-yaer health insurance policy having a cash value! Are there such policies? Back to my problem: One employee (out of 13 or so) bought an individual dental insurance for his spouse. Simple Question: Is the premium a reimbursible expense under S125? Link to comment Share on other sites More sharing options...
Guest Arlene Crant Posted November 7, 2000 Share Posted November 7, 2000 Dave, I need to confirm that the Publication 502 expenses can be used under a 125 Health Care Spending Account as reimburseable. Thanks. Link to comment Share on other sites More sharing options...
Dave Baker Posted November 7, 2000 Share Posted November 7, 2000 Yup, both are talking about the definition of expenses paid for "medical care" as defined in Internal Revenue Code section 213(d). It's possible that the cafeteria plan document is written more narrowly, though -- that is, by its terms certain items that are "medical care" expenses within the meaning of the Internal Revenue Code might be expressly excluded from reimbursement under the particular cafeteria plan. Link to comment Share on other sites More sharing options...
Kirk Maldonado Posted November 7, 2000 Share Posted November 7, 2000 I seem to recall that the CCH Pension Guide had a very detailed discussion of appropriate expenses. That report is considerably more detailed than Publication 502. Kirk Maldonado Link to comment Share on other sites More sharing options...
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