opt-out of health insurance - allow employee choice b/w cash and alloc

[EGB]

I realize that an opt-out of health insurance in favor of a cash payment needs to be run through a Section 125 plan to avoid contructive receipt issues. Suppose we want to allow each employee who opts out of health insurance the right to choose to either take cash or to put all or a portion of the cash into a medical or dependent care flex account. I assume that, so long as this option is documented in the 125 plan, there is no constructive receipt issue related to the right of the employee to choose to take cash or to instead have the amounts placed in a flax account. ?? I have seen situations in which cash is paid to the employee and situations in which the cash is placed in a flex account, as determined by the employer, but I have not seen a situation in which the employee is given the choice. Any comments would be appreciated. Thanks.

[Kirk Maldonado]

Katherine:

If properly documented in the cafeteria plan document, you can achieve your desired results.