Introduction of Employee Cost Sharing

[Guest lschaab]

If an employer currently pays 100% of the cost of medical insurance for its employees, and later decides (mid plan year) to introduce cost sharing, can employees be permitted to pay the increase before tax? Before you jump in, the employer does presently have cost sharing pre-tax for employees buying traditional coverage. I think 'no' but am second guessing my first answer primarily because we know that our first answer won't be the answer the client wants to hear. Anybody got a better answer?

[Guest JerseyGirl]

Wouldn't that consistute a *significant increase in cost* for the employee, allowing for a change in status? I'm assuming,of course, that the employer has a plan document for a 125 plan that allows for that.

[GBurns]

If this employer is paying 100% for the employee medical insurance, How can there be some that are pre-taxing an employee cost?

What is your differentiation between "medical insurance" and "traditional coverage"?

[Guest lschaab]

Sorry. The employees with an HMO have 100% employer paid coverage and therefore, when going through the election process ignore the option to pre-tax or not to pre-tax. There are a handful of employees with Traditional coverage (a more expensive medical plan) that do payroll deduct a portion toward the cost of the coverage. To answer Jersey Girls' question, I agree with the 'significant increase' however, the employees who didn't have to payroll deduct before still had the option to pay for health insurance pre-tax (or after tax) but the option didn't apply and no affirmative election was made either way. So the real question is can they pay it pre-tax now? Does that make any sense?