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125 Plan for COBRA Premiums


Guest Sandy Bullock
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Guest Sandy Bullock

All employees of a "start up" company are on COBRA from their previous employers. All employees are highly compensated. There are no non highly compensated employees. Can a 125 plan be established to cover the COBRA premiums? If so would the plan go into effect on the date adopted or could it be made retroactive? Is there special wording for the plan document?

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Guest CBoudjouk

As far as premium conversion goes, Section 125 only allows the premiums for the employer sponsored plan. In terms of flexible spending accounts, I don't think that insurance premiums are an allowable expense.

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Individual Health Insurance premiums can be run through a Section 125 plan as a separate reimbursement category for just individually owned insurance premiums. They may NOT be run through the Medical FSA.

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