Does retroactive coverage under a cafeteria plan violate the construct

[Guest SCUDDESLER]

Suppose an employee is hired January 1 and receives her first paycheck on January 15 for the period January 1 through January 12. Further, the employer offers the employee the option of paying for health insurance coverage with pre-tax dollars through a cafeteria plan. The employee has thirty (30) days from her date of hire to elect to participate in the plan. As the plan is currently administered, if our employee elects to pay for health insurance coverage with pre-tax dollars on January 20, the election is retroactively effective to January 1. The premium cost that should have been deducted from the employee's January 12 paycheck is spread over the employee's remaining paychecks during that same year.

Is there a constructive receipt problem? In other words, because under Proposed Regulation 1.125-1, Q&A-6, a salary reduction agreement must relate to compensation that has not been actually or constructively received by the participant and does not become currently available to the participant, since the participant's election is retroactive, is the participant in constructive receipt of the premiums that are used to pay for the retroactive coverage which were not deducted from her January 12 paycheck?

[Lisa Hand]

Are employees eligible for benefits as of date of hire? There is no waiting period?