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Belgarath

Individual health insurance premiums in 125 plan

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I think I understand this, but I'd love any input, 'cause maybe I've got it wrong.

Plan has premium conversion account, and an FSA. Plan document, and plan forms/administration appear to be at odds.

My understanding is this: No premiums can be paid through the FSA. Premiums for group health insurance offered by the employer, or individual policy premiums for "excepted benefits" such as dental or vision, can be paid through the premium conversion account. However, premiums for individual "health" insurance may NOT be paid pre-tax through the cafeteria plan.

First, is that right? The document appears to support this interpretation, yet the forms/administration have been allowing pre-tax treatment through the cafeteria plan for individually purchased HEALTH insurance, as long as it isn't purchased through a federal or state exchange. I believe this is incorrect?

Thanks!

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You're understanding is correct and the forms/administration is/are incorrect.

When implemented in 2020 the recently released HRA changes should at long last provide a mechanism for small employers to provide a tax free reimbursement of individual policies. 

 

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