Cafeteria Plans

[Guest Kim Capps]

Can an employer through a premium only plan offer a voluntary individual life program on a pre-tax basis and if so, would the actual life benefit be taxable or would it be non-taxable?

[Bob R]

I'm not sure what voluntary life is, but the only type of life insurance (other than AD &D) is group-term life under Section 79.

The key is that a cafeteria plan can generally only include benefits that could be provided by an employer on a tax free basis. Section 79 excludes employer provided group-term life up to $50K. AD & D is allowed because the IRS considers it to be accident and health coverage.