Section 125 for Small Employer

[Guest Thornton]

I am dealing with a small dental partnership where the son of one partner has very large medical expenses. The client is considering incorporating to a C corp and starting a flexible spending plan under a cafeteria arrangement. All employees (20-2HCE) would be eligible. I'm am not a medical benefits expert.

Is this a reasonable solution? If the HCE with the ill son contributes up to $10,000 to the plan, how will this affect discrimination testing. I see the key employee concerntration test as a possible problem. Any thoughts and/or guidance?