1x2

Duly noted. But once the barn door's opened, it seems everything wants out...

This is great, Chaz, thanks to both of you, 100% of what I needed to know.

Thank you for your quick response, GMK, and thanks for the sympathy vote on the plan cost

Hello, I'm hoping for some clarification on the following: We have a medical fully insured plan. ER pays 100% of EE premiums. EE can elect family coverage, but must contribute towards the premiums; ER will also contribute a set amount per month. The EE has to sign up for the coverage and list dependent info; e.g., name, dob, gender, etc. The "election" to cover the dependents is valid until revoked by the EE. The payroll system is configured with one deduction function that withholds the employee portion for each periodic payroll, as a pre-tax deduction. The questions I have are: Must we have a cafeteria plan for this? If we do, must we demand from the employees an election each year to "defer" their co-pay, in view of the fact that the dependent insurance is in place forever until the employee decides to change it? (Note: the fact is we do have a caf plan, but it seems a wasted expense for the above purpose). Thank you in advance for your time and thoughts.

Hello Chaz, Thank you for your thoughts. I'm going back to square one: I can't find any authority for a corporate deduction for payment of medical premiums to retired employees except under Sec. 419/419A. Sections 419/419A incorporate non-discrimination requirements which the corporation will fail, by design, as this "plan" will cover only retired Presidents. I don't think I can run the premiums through our Caf Plan, because once again, a (post-retirement medical premium) benefit would be available only to ex-Presidents, and then the Caf Plan would fail non-discrimination requirements, by design. So- unless I'm overlooking something, the corporation could pay premiums (which would be non-deductible by the corp on its 1120) and issue a 1099-misc each year to each of the ex-Presidents. But perhaps I'm overlooking something- like the definition of "employee" includes "retired employee"- then Sections 105 and 106 is all I need. Thanks for any thoughts, 1x2

Hi, Background: Our company has a cafeteria plan- the plan covers employees (=while employed) and makes no mention of retiree benefits. PPO Employee health insurance through a commercial insurance carrier is one of the benefits offered through the Caf Plan (which also includes, FSA, STD, Life, etc). Our board is considering offering medical coverage to retired employees who have held the office of President of the Company (only; no other retired employees); no length of service in that capacity is specified (if that matters). It's not decided whether the Company will seek any premium co-pay (contribution) from the retired President(s). My thinking is that it is fine to offer this (albeit expensive benefit), which would be offered outside the caf plan, from the same provider as covers our employees. The policy would be (as specified by our current carrier) a Medicare supplement/secondary payer policy. I'd like to contain this by offering only to the current retiring President, but confining the benefit to a particular individual seems discriminatory. My concerns are: whether offering the benefit is legally discriminatory, that the Company is allowed the full tax deduction for the premium and that there is no 1099 income to the retired President(s). Thank you in advance for your input.