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It's not a client, the question came from a friend. My friend was the person against whom the transgression was committed. It seems to me that if the company put an ad in the paper indicating what an employee's account balance was, that must be in violation of some law. That is not what happened here, but whatever law would prevent that would be what I'm looking for. I did some searching on a fiduciary duty of privacy and/or confidentiality but found nothing.

I can see all sorts of administrative pitfalls. What happens if/when (1) the spouse changes employers? (2)The amount of the premium/reimbursement changes (3) the employer refuses to let a 3rd party come into their employment/benefit relationship with the spouse (4) the spouse's employer's payroll can't handle a different deduction than everyone else, etc. (5) the spouse quits working and wants on your plan -- got to stop the reimbursement or risk overpayment This would need ALOT of oversight assuming other random employers even want to take the reimbursement. I agree with GBurns- go back to WHY you are doing this? And see if you can't deal directly with your employees. Possibly give a discount to those whose spouses are covered elsewhere? (if that is even legal under PPACA) I know that you can upcharge those whose spouses have access to other coverage but choose to be on your plan anyway.

I have never seen anyone "reimburse the spouse's employer", Are you sure that this is what you want to do? If, Yes, I must ask Why? Usually the spouse would be charged by her employer for the additional coverage and you would reimburse your employee for the additional cost incurred by their spouse.

I'm not sure I agree with GMK. I think it is perfectly legitimate (and in fact commonplace) to use "cash basis" accounting for determining which pay is deferral. If the "pay date" (the date on which the participant has an irrevocable right to cash) occurs after the entry date, but part of the pay is for work performed before the entry date, the entire amount of that pay is "deferrable." Sorry, but I have no authority (at my fingertips), but the "pay date" is the first day on which the participant has the right to the cash, and hence can defer it at that point if he or she is otherwise eligible for participation.