Rosanne Calzetta

According to the IRS, Participants in a cafeteria plan must be permitted to choose among at least one taxable benefit (such as cash) and one qualified benefit. FTEs with no dependents don't have that choice so the medical plan may not qualify for pre-tax treatment under Section 125. Medical reimbursement plans, such as FSAs can qualify for Section 125 tax treatment as long as they are offered on an optional basis and meet required non-discrimination guidelines.

A form needs to be completed for each FTE - since spouse is also a full-rime employee, the offer of coverage must be reported on line 14 (either 1A or 1E). Line 15 should reflect cost of single coverage in lowest cost plan if using 1E, or be left blank if using 1A. Line 16 should reflect safe harbor code (1F, 2G or 2H). No information needs to be entered in Part III as spouse's actual coverage will be reported on form of employee electing family coverage.